Russia's military orders will increase 8.5 percent to total 40.5 billion U.S. dollars next year, Prime Minister Vladimir Putin said Saturday.

"I consider the growth in military orders to be an important instrument for modernizing the military industrial complex itself, and also connected sectors, and providing a stimulus for the emergence of promising scientific developments, and production of new materials and components," Putin said at the 11th national congress of the United Russia Party.

Putin, who is leader of the ruling party, also said Russia's economy is expected to shrink by 8 to 8.5 percent this year, while inflation will be under 10 percent, "one of the best indicators after 1992."

"GDP decline will not be dramatic as was expected earlier...it will in fact be lower--about 8-8.5 percent. But this is still too much, and it is more than in some other countries," he said.

Russian companies will be provided with state-guaranteed loans totalling 17 billion dollars next year, while hi-tech products will also be provided with governmental support of more than 2 billion dollars, Putin added.

He also reiterated President Dmitry Medvedev's call for modernizing Russia's economy.

"If we want to live on the profits of a modern economy .... we must recognize that vital factors for development in the coming period will be our domestic resources, optimizing industrial equipment, improving labor productivity, and forming efficient employment structures," he said.

More than 600 delegates and about 2,000 guests attended the one-day congress of the United Russia Party, which was held in St. Petersburg for the first time.

Party members are expected to adopt a new document on party ideology. They will also elect members of the Supreme Council.

Founded in December 2001, the United Russia Party is the largest political party in Russia.

Putin was elected head of the party as a non-party member after finishing an eight-year presidential tenure, while Medvedev was elected president in March 2008 as a candidate of the party.