Sberbank CEO Gref Warns Russia Risks Recession Without Deeper Rate Cuts
Sberbank CEO German Gref, one of Russia’s most influential bankers, warned on Thursday that the economy is stagnating. He cautioned that unless the central bank makes deeper interest rate cuts, Russia could slide into recession.
Russia’s wartime economy expanded 4.1% in 2023 and 4.3% in 2024, outperforming G7 nations despite multiple rounds of Western sanctions following its 2022 invasion of Ukraine. However, growth is slowing sharply under the weight of high borrowing costs.
Massive military spending — the highest since the Cold War — has fueled inflation, prompting the central bank to raise its key rate to 21% in October 2024, the highest level since 2003. Rates were later cut to 20% in June and 18% in July, but officials continue to warn that the economy remains constrained by expensive credit.
Speaking at the Eastern Economic Forum in Vladivostok, Gref, a former economy minister, said Russia showed signs of “technical stagnation” in the second quarter. He added that the central bank’s projected cut to 14% by year-end would not be enough to revive growth, suggesting recovery is only possible if rates fall to around 12%.
Gref noted that banking data, which arrives faster than state statistics, shows growth slowing sharply, with near-zero expansion in July and August. Finance Minister Anton Siluanov also told President Vladimir Putin last week that growth in 2025 is expected to slow to 1.5%, well below the earlier 2.5% forecast.
Pressure is mounting on the central bank, led by Elvira Nabiullina, to act decisively at its September 12 meeting. Gref warned that without stronger rate cuts, recovery could be much harder in the future.
Deputy Governor Alexei Zabotkin acknowledged progress in fighting inflation but said the central bank was cautious about overestimating the pace of improvement. Economy Minister Maxim Reshetnikov also admitted that recent data shows the economy is cooling faster than expected.
Despite earlier growth during Putin’s first two terms, when GDP surged to $1.7 trillion from under $200 billion, Russia’s nominal GDP today stands at about $2.2 trillion — close to its 2013 level, before the annexation of Crimea.
