Russian economy enters "technical stagnation", CEO of Russia's largest bank says

The Russian economy slipped into a stage of "technical stagnation" in the second quarter of this year, and a significant reduction of the key interest rate is needed for recovery.

Source: German Gref, CEO of Russia's largest bank, Sberbank, as reported by Kremlin-aligned Russian news agency Interfax

Details: "The second quarter can, in fact, be considered technical stagnation. July and August show quite clear symptoms indicating that we are approaching zero marks," Gref said.

Sberbank estimates that the key interest rate will drop to around 14% by the end of the year, though this is unlikely to be enough to revive the economy.

"At current inflation levels, the rate that could allow us to hope for an economic revival is 12% or lower. So once we reach those levels, most likely we will see the economy revive," Gref said.

The Sberbank head added that the loan portfolio may shift to sustainable growth in the second half of 2025 if the Central Bank reduces the rate by at least 200 basis points (2 percentage points).

Gref emphasised that the real interest rate, rather than the nominal one, is what truly matters, and in Russia, it is currently among the highest in the world.

Background: From January to July, Russia’s federal budget revenues from the oil and gas sector fell by 19% compared to the same period last year, down to US$69.2 billion.

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