Sberbank CEO: Russian economy stagnates, technical recession looming

Sberbank CEO German Gref, one of the most powerful bankers in Russia, warned that Russia's economy is stagnating and that if the Central Bank does not lower interest rates, the country will face a recession.

The Gaze reports on it, referring to Reuters.

Despite high military spending and economic growth of 4.1% in 2023 and 4.3% in 2024, high interest rates are significantly hampering development. The Central Bank raised the key rate to 21% in October last year to curb inflation, and then gradually lowered it to 18%, but this, according to Gref, is not enough to stimulate the economy.

According to German Gref, economic growth in July and August was close to zero, and bank data indicate a slowdown even before the publication of government statistics.

Speaking to reporters on the sidelines of the Eastern Economic Forum, he said that in the second quarter, the economy looked as if it was in “technical stagnation.”

Gref also stressed that the economy will only be able to recover if rates are lowered to 12%, and the expected reduction to 14% by the end of the year will not solve the problem of stagnation.

Finance Minister Anton Siluanov also confirmed a slowdown in economic growth to 1.5% in 2025, which is significantly lower than previous forecasts.

The economic situation is already causing concern among the authorities: Economy Minister Maxim Reshetnikov said that the latest data indicate an accelerated “cooling” of the economy, low demand, and restraint in producer prices.

Some machine-building enterprises have switched to a four-day working week due to high costs, indicating limited investment and reduced production activity.

The historical contrast further highlights the problems: during Putin's first two terms from 2000 to 2008, Russia's economy grew from less than $200 billion to $1.7 trillion, but today nominal GDP is only $2.2 trillion, which is equivalent to the 2013 level.

This demonstrates an almost complete halt in economic development over the past decade, despite military spending and state support.

The Gaze previously reported that the Russian economy is on the verge of stagnation, GDP growth has almost stopped, industry is shrinking, and regions are accumulating huge budget deficits while spending money on military payments.