Russian economic turmoil to last two years

"I don't believe you can call it a crisis - you can call it what you like," he told his audience, adding that “our economy will get out of this crisis. How long? Maybe two years, but after that, growth is inevitable."

The Russian president was named Russia's Man of the Year for a 15th successive year on Tuesday, according to Russian news agency Interfax, and enjoys record-high levels of public popularity.

But he is under pressure to respond to rising fears of a deep economic recession and a currency crisis which has seen the government step in to prop up the rouble this week.

Having hit a peak of 97 roubles per euro on Monday, the government’s intervention appears to have restored calm to financial markets, with the rouble trading at 72.5 per euro on Thursday morning (18 December). The currency has still lost around 40 percent of its value since January. Media reports have suggested that many Russians have begun panic-buying household goods fearing that prices will rise as the crisis filters through to shops.

Russia’s finance ministry revealed on Wednesday that it had spent almost $2 billion of its foreign currency reserves since Monday in an attempt to stabilise the markets.

Deputy finance minister Alexei Moiseyev said Russia would continue to sell foreign currency from its treasury accounts "as much as necessary and as long as necessary". Russia is estimated to hold $400 billion in foreign reserves which should provide a bulwark against a sustained run on the rouble.

Meanwhile, the Russian central bank has reassured its financial sector that it will provide additional capital if needed. Even so, it expects that up to $120 billion (€95 billion) of foreign cash will leave Russia over the next year.

The currency collapse was triggered by the central bank’s decision to hike national interest rates by 6.5 percent to 17 percent at the weekend, the highest rate increase since 1998, when the Russian currency collapsed and the government defaulted.

The ongoing sanctions battle with the EU and the US in response to the war in Ukraine has also hurt an economy which is forecast by the central bank to tip back into a 4.5 percent recession in 2015. Putin claimed that western sanctions were responsible for 25-30 percent of the countries economic problems.

But a rapid decline in oil prices is the main cause of Russia’s economic woes.

Russia supplies Europe with most of its oil and gas, and the government needs the price of oil to stay at around $100 per barrel to balance its books.

However, as the crisis in the Ukraine has intensified, the price of Brent crude has fallen to its current rate of $59 per barrel.

Putin's speech went on to accuse the EU and Nato of trying t o destabilise Russia with sanctions and high-level criticism

He said the built a new Berlin Wall by examining eastwards in the past 15 years and organised a "coup" in Ukraine.

Drawing on the cliche of Russia as a bear, he added that the West wants to catch it, de-claw it, and skin it alive, while creating effigies in its place.

"Do we want our skin hung on a wall?", he asked.