Russian president also condemns the creation of a Ukrainian Orthodox Church independent of Moscow, saying it violated religious freedoms and drove a wedge between the nations.
President Vladimir Putin on Thursday said the West was threatened by an increasingly powerful Russia, as he promised further economic growth during an end-of-year press conference.
The annual event comes after months of increasing discontent at home and tensions abroad, from a stand-off with Ukraine to deteriorating ties with Washington.
Asked about Western sanctions against Russia, Putin said these were "connected with the growth of Russia's power."
"A powerful player appears who needs to be reckoned with. Until recently it was thought there was no longer such a country," he said from behind a large wooden desk to an audience of hundreds of journalists.
The president dismissed spy scandals - such as the poisoning of former double agent Sergei Skripal and his daughter in England - as invented to damage Russia's standing.
"If there hadn't been the Skripals, they would have thought up something else," he said.
Domestic concerns also loomed large after the longtime leader's approval rating fell following a deeply unpopular pension reform this year.
He began the press conference, as usual, by reeling off economic growth figures.
"The main thing is that we need to get into a new economic league. We could very well take the fifth place in terms of size of economy. And I think we'll do that," he said.
Russia is currently ranked 12th in the world pecking order by the International Monetary Fund, which lists the United States first, followed by China, Japan, Germany and Britain.
Putin said the economy grew 1.7 percent over the first 10 months of the year, roughly in line with predictions, while unemployment was down. Full-year growth is estimated at 1.8 percent.
"After a long break, a small growth in real incomes has nonetheless been recorded," he added.
But he appeared to damn his prime minister, former president Dmitry Medvedev, with faint praise, saying that he was "generally" happy with the work of his government.
Putin was re-elected to a fourth term in March with nearly 77 percent of the vote, but recent polls have seen his support drop below 50 percent.
His previous term in the Kremlin was defined by a decline in living standards for many Russians, despite what were perceived as foreign policy wins.
During the wide-ranging question and answer session, Putin praised US President Donald Trump's decision to pull troops out of Syria, but condemned his withdrawal from a Cold War arms agreement.
He warned of a "collapse of the international arms (control) system" following Washington's announcement it would drop the Intermediate-Range Nuclear Forces agreement.
Earlier the president said Moscow would develop new missiles in response to the move.
Putin also addressed the recent escalation of tensions with Ukraine following a naval confrontation in the Kerch Strait off Crimea and Russia's arrest of several Ukrainian sailors.
He repeated Kremlin claims that Ukrainian actions in the strait were a "provocation" and aimed at boosting President Petro Poroshenko's chances in an unpredictable election next year.
The Kremlin demands questions be sent in advance, but reporters every year go to great lengths to encourage the president to call on them.
This year one journalist was dressed as a Russian fairytale character, the snow maiden, while another came holding a tambourine.
Organisers, however, put a size limit on the placards media representatives traditionally hold up to attract Putin's attention.
The president began the tradition of such end-of-year press events in 2001, but with time they have evolved into marathon events.
Since 2004, all December press conferences have surpassed three hours.
His record was in 2008, when questions and answers went on for four hours and 40 minutes.
The appearance was shown live on several TV stations, with some channels trailing the event with a day-long countdown clock.
As Russia has become increasingly centralised under Putin, questions at the conference have begun to resemble lobbying attempts to resolve specific problems, from fixing roads to freeing political prisoners.
Putin condemns creation of independent Ukraine church
Putin condemned the creation of a Ukrainian Orthodox Church independent of Moscow, saying it violated religious freedoms and drove a wedge between the nations.
Orthodox bishops created the new Ukrainian church at a historic synod in Kiev on Saturday, ending more than 300 years of Moscow domination.
The decision was welcomed by the US and Ukrainian President Petro Poroshenko.
But Putin slammed the decision as a "blatant breach of religious freedoms."
The Church's creation came after a landmark decision by Istanbul-based Ecumenical Patriarch BartholomewI to recognise Ukraine's independence from the Russian Orthodox Church.
The ruling in October sparked fury in Moscow, which has overseen the Ukrainian branch of Orthodoxy for the last 332 years.
It led the Russian Orthodox Church to cut all ties with the Ecumenical Patriarchate of Constantinople.
Putin on Thursday suggested that Bartholomew's "main motive" was to "subjugate" Ukraine.
"It is also done with the aim of a further split between the peoples of Ukraine and Russia," he said.
He also warned the decision would lead to a redistribution of Church property that could be "bloody."