The Russian economy slipped into “technical stagnation” in the second quarter of 2025, moving to zero growth in July and August, Russiaʼs Sberbank CEO Herman Gref said at the Eastern Economic Forum (EEF) in Vladivostok on Sep. 4.
Russia’s Sberbank is a Russian major state-owned bank and financial services company headquartered in Moscow.
Gref blames the Russian Central Bank’s 18% key rate for slowing down the economy. It reached its peak in October 2025, when the Central Bank raised it to 21% to fight increasing inflation. Since June it has been lowering, but still remains “one of the highest in the world,” Gref said.
Russia’s annual inflation fell for the fourth month in a row to 8.8% in July 2025, the lowest since October last year, down from 9.4% in June, Russian Central Bank’s data shows.
Sberbank expects the key rate to stand near 14% by year-end, but Gref argued that real recovery requires 12% or lower, Russiaʼs Interfax reported.
“With the current level of inflation, the rate at which we can expect the economy to revive is 12% or lower,” Gref said. “So once we reach those levels, we are likely to see an economic recovery.”
The interest rate in Russia also remains one of the highest globally, Gref said. A cut of at least 200 basis points could allow bank lending to resume steady growth in the second half of 2025, he said.
“It is important to exit the period of managed cooling of the economy so that it does not turn into stagnation. Restarting the economy later will be much harder than cooling it down,” Gref said.
According to Gref, Russian experts and businesses are calling for all available tools to support growth. A prolonged pause in investment, he added, could weigh on the economy for the next two to three years.
Gref highlighted geopolitical tensions, interest rates, exchange rate pressure, and a cyclical decline in commodity prices, which make up the bulk of Russian exports.
“Economic policy is not just science, it is art,” he said. “It is crucial to balance these factors so the economy does not come to a sudden halt.”
Russia is running out of the resources that have provided its economic growth for the past two years following the full-scale invasion of Ukraine, the head of the Central Bank of Russia, Elvira Nabiullina, said during the St. Petersburg International Economic Forum on June 19.
Now, the Russian economy is further weakening due to falling oil prices, budget constraints, and rising corporate debt. The situation is also complicated by a weak national currency and high interest rates. Nabiullina said the country has to search for new economic models.
However, the percentage of companies experiencing labor shortages has been declining, according to Russia’s central bank. The number of industrial enterprises reporting to be fully staffed has gone up as well as that of enterprises that have reduced the number of work shifts – but, for now, it is unknown whether it will impact the overall economic situation.
Russia’s central bank is observing a downward trend in inflation, although inflation expectations are still high, Nabiullina said during the briefing on June 6.