Russian President Vladimir Putin has hailed the nation's economic performance.

Speaking in a televised call-in show with the nation, Mr Putin said the nation's economic performance has remained strong, despite Western sanctions slapped on Russia over the Ukrainian crisis and a slump in global oil prices.

He noted a 3.7 per cent increase in agricultural production and low unemployment but acknowledged an 11.4 per cent annual inflation rate had put a strain on the consumers' budget.

Mr Putin pointed to the ruble's recent recovery following its sharp devaluation last year as a sign of the Russian economy's resilience.

He said the sanctions have given Russia a strong impetus to diversify away from its heavy reliance on oil and dependence on imports, and would encourage it to develop high-tech industries.

Official estimates are that Russia's economy will shrink by 3 to 5 per cent this year in its steepest decline since Mr Putin took office 15 years ago but he said the slump would likely be less significant.

"We must use the current situation to reach new levels of development," he said.

Mr Putin added that the country can overcome any challenges if it remains united. "If we preserve a stable situation in domestic politics, preserve the current consolidation of society, we shouldn't fear any threats," he said.

Alexei Kudrin, who served as Russia's finance minister in 2000-2011, warned in his question to Mr Putin that current economic policy does not allow Russia to achieve stable economic growth.

Mr Kudrin earlier estimated Russia's annexation of Crimea and the retaliatory Western sanctions will cost Russia up to $200 billion in the next three years.

Mr Putin acknowledged the need for tight budget policies, but added that the government should be careful not to hurt the population. "If we want people to trust us, we need to have the heart," he said.

Mr Putin also defended his move to approve the delivery of the long-range S-300 air defence missile system to Iran, saying the 2010 Russian ban was voluntary.

He said his decision this week to lift the ban does not contradict international sanctions against Iran, which are still in place despite a framework agreement reached earlier this month between Iran and six world powers over its nuclear programme.

He said he made the move because Iran "has shown a great degree of flexibility and a desire to reach compromise".

He said the S-300 is a defensive weapon that should not pose any threat to Israel, and may in fact serve as "a deterrent factor in connection with the situation in Yemen".

Mr Putin accused Ukraine of violating its obligations under a peace deal by maintaining an economic blockade on rebellious eastern regions.

He said Ukraine has not delivered pensions and other social payments to people in the east and has shut financial services to the region.

Mr Putin argued that by acting in such way, the Ukrainian leadership is effectively cutting off the eastern regions from the rest of the country.

At the same time, the Russian president insisted that he remains committed to cooperating with the Ukrainian president to overcome the crisis, adding that the Minsk agreement signed in February provides the only way out of the crisis.