Russian finance on red alert

The CEO of Russia's largest bank, Sberbank, German Gref, has sounded the alarm about the country's economic situation, warning that Russia has entered a phase of "technical stagnation" that could turn into a recession if the central bank does not quickly cut interest rates.

Mr. Gref announced at the Eastern Economic Forum in September 2025 that Russian economic growth in July and August was "close to zero" and that recent data indicated the economy was at a standstill. He urged the Central Bank to lower its key interest rate, currently at 18%, to at least 12%, warning that the current restrictive monetary policy could "excessively cool" the economy and lead to a prolonged pause in investment.

This warning comes as the Russian economy faces pressures from increased military spending, high inflation, labor shortages, and international sanctions.

The Central Bank had already raised rates to 21% in 2024 to combat inflation, but businesses now complain that borrowing costs are holding back investment and growth. Russian government officials, including Economic Development Minister Maxim Reshetnikov, have echoed these concerns, saying the economy is "slowing down faster than expected" and that growth forecasts for 2025 have been revised downward.

Russian President Vladimir Putin has publicly rejected Gref's warning, defending high interest rates as necessary to contain inflation, while acknowledging that economic risks remain.

(MH with Anva - Source : Novaya Gazeta - Photo : ©Unsplash)