Putin Headlines St. Petersburg Forum as Russia Debates Whether to Stop Cooling Its Economy

President Vladimir Putin delivered the keynote at the plenary session of the St. Petersburg International Economic Forum on Friday, the country's main annual event for attracting investors, held this year under the theme of pragmatic dialogue. The event, profiled by Al Jazeera, comes as Russia's wartime economy slows after two years of rapid, state-driven expansion.

The central tension was monetary. The steelmaking billionaire Alexei Mordashov told RBC that the policy of cooling the economy should be reconsidered, arguing that domestic restrictions now constrain business more than Western sanctions do. His complaint is directed at the Bank of Russia's key interest rate, which was 16.5 percent late last year as the central bank worked to curb inflation. The Bank of Russia governor, Elvira Nabiullina, who skipped the forum, has said she will not ease policy prematurely to reach the 4 percent inflation target.

Official figures released around the forum were presented to look strong. Deputy Prime Minister Tatyana Golikova reported a record level of employment, and Moscow Mayor Sergei Sobyanin said the capital's wage funds rose 14 percent in the first quarter against inflation he put at 4 to 5 percent. Komsomolskaya Pravda summarized inflation, wage growth and the key rate as the dominant themes of Putin's address.

From an Austrian perspective, this is the classic strain of a credit-fueled boom reaching its limits. Heavy military and state spending raised output and wages, but the central bank's high rate is now the cost of containing the inflation that spending created. The conflict between industrialists demanding cheaper money and a central bank refusing to provide it is a familiar stage of the cycle, in which the malinvestment of the boom must either be financed at high rates or written down.