He spoke of a tax amnesty for wealthy Russians who have moved their cash out of the country over fears of destabilization following the annexation of Crimea and continued conflict in Ukraine.
Putin also claimed that sanctions will help spur Russia on to meet its economic goals, belying the slowdown in economic growth since the regime began. He trumpeted the country's military strength.
"No one will secure military superiority over Russia," Putin said. "We have sufficient strength, will and courage for our defense."
As expected, he played on nationalist heartstrings by stating that some countries want to see Russia dismantled like Yugoslavia, the former Soviet bloc country which was broken into six.
The general tone of the speech was "pretty aggressive, anti-Western rhetoric," according to Timothy Ash, head of emerging markets research at Standard Bank.
With a plummeting ruble and oil price, spiraling inflation, and the prospect of more stringent sanctions from Western powers, Russia's short-term economic prospects are falling faster than the temperature during a Siberian winter.
The ruble fell sharply against the U.S. dollar as Putin began speaking, although it later recovered some ground as he mentioned efforts to bring capital back to the country, and to make it easier to do business there.
Putin also blamed the weakness of the ruble on a "speculative attack".
Disposable income to shrink
Putin previously served as Russia's Prime Minister, and this term coincided with relative economic prosperity for the country, as rising oil and gas prices helped boost Russia's biggest exports. In 2015, however, the average Russian household's disposable income will shrink by 2.8 percent, according to official Russian figures - the first fall since Putin came to power.
As President, his recent focus on defence and nationalism seems to have boosted his approval ratings, but it's far from clear that this can continue if all Russians - from street-cleaners to oligarchs - feel worse off.
The President's problems have been in focus this week.
The cancellation of a planned $50 billion South Stream gas pipeline through Central and Eastern Europe, which would have helped channel Russian gas to Europe, indicated the pressure Putin is coming under. This marked a "significant loss" for Putin and the Russians, according to Emily Stromquist, global energy and natural resources analyst at Eurasia Group.
On Thursday, the Central Bank of Russia announced that it had cut its currency repo rates, in an effort to stabilize the ruble, after Russia's currency hit new lows against the U.S. dollar earlier this week.
The "ability of (Russian) domestic corporates to service foreign debt" is likely to cause further problems as a result of the ruble's weakness, Geoffrey Yu, currency strategist at UBS, told CNBC. He warned of "more pain to come in the short term".
Putin may be trying to rally Russians with what the British would call the "Blitz spirit" - staying calm under attack from external aggression (coined during the German bombings of Britain during the Second World War). By arguing that the economic situation is the result of Western aggression and hypocrisy, Putin may be able to keep enough of the populace on side.
He has also emphasized the importance of building new partnerships outside the West. This week's meeting with Recep Tayyip Erdogan, the President of Turkey, which also seems to be moving away from the closer ties it had developed with Europe, is a case in point.
U.S. President Barack Obama said in a meeting with business leaders in Washington on Wednesday: "(Putin) has been improvising himself into a nationalist, backward-looking approach to Russian policy that is scaring the heck out of his neighbors and is badly damaging his economy".
However, Obama added that he doesn't see a solution "until the politics inside of Russia catch up to what's happening in the economy inside of Russia".
Catherine Boyle, CNBC