Mr. Herman Gref, CEO of Russia's largest bank Sberbank, warned that the Russian economy is "losing steam", needing to lower interest rates further to escape stagnation and prevent the risk of recession.
In the context of the West continuing to tighten sanctions since the outbreak of the Ukrainian conflict in 2022, the Russian economy has proven its resilience to be significant, even exceeding forecasts many times. GDP growth will be 4.1% in 2023 and 4.3% in 2024. However, the outlook for this year is not very bright: The Russian Ministry for Economic Development forecasts only 2.5%, while the Russian Central Bank is more cautious, expecting 1-2%.
Speaking at the Eastern Economic Forum (EEF) in Vladivostok on September 6, Mr. Herman Gref - CEO of Sberbank - warned that the slow growth situation could put the country at risk of recession.
According to Mr. Gref, the current basic interest rate at 18% is likely to decrease to around 14% by the end of the year. However, this level is still not enough to stimulate the economy. Only when interest rates fall to about 12% or lower can the economy recover significantly, he stressed.
Mr. Gref called the second quarter of 2025 a period of "technical stagnation" and urged the government and the Central Bank to take timely measures to "exit the controlled cooling phase" before falling into a real recession.
The head of Russia's top bank also said that a weak ruble by the end of the year could become a boost for exporters, while helping to balance the state budget.
However, he warned that this effect is only short-term, while the long-term risks of slow growth and high borrowing costs are weighing on businesses and consumers.
Sharing the same view, Economic Development Minister Maksim Reshetnikov said at EEF that growth momentum is weakening faster than expected. He revealed that the ministry will have to adjust its forecast, while emphasizing that "Russia is very close to the recession threshold, and everything depends on policy, especially interest rates".
Mr. Reshetnikov has previously warned many times that the economy can only maintain its resilience if capital costs are reduced in time.
Meanwhile, Russian President Vladimir Putin expressed a more cautious view. He said that cutting interest rates too quickly could increase inflationary pressures, which are at 8.8%. However, the Russian leader affirmed that he is fully confident that he can reduce inflation to the minimum while maintaining growth momentum.
The Russian Central Bank will hold a meeting on September 12 to decide on monetary policy. The agency said it could cut interest rates to 10.5% in 2026 if inflation returns to the 4% target.
While the West maintains harsh sanctions, Russia must rely more on monetary policy to create momentum for the economy. The decisions in the coming months by the Russian Central Bank and the Kremlin will be revivable, shaping Russia's growth path in a period of many fluctuations.
