Investment activity in Russia still strong despite high interest rates - Sberbank's Gref

MOSCOW. Sept 24 (Interfax) - Investment activity in Russia remains strong despite high interest rates, Sberbank head Herman Gref said at a meeting with Russian President Vladimir Putin.

"We see that investments are growing. Paradoxically, you are absolutely right, with a high Central Bank rate you would think investment lending would be the first type of lending to start to decline. But we have already issued about a trillion rubles of investment loans in the first half of this year, and the volume of investment deals currently in progress is about 25% higher than last year," Gref said.

"This is indeed a paradox in many respects. It shouldn't be like this, but for now, the investment activity of companies is very high. Of course, government investments are growing, but this is not the only reason - we are seeing a big increase in private investments as well," Gref said.

Putin said companies had probably realized how attractive it is to investment within the country. "It looks like there is now an awareness (I mean private investments, growth in private investments) that it is better to bring everything indoors. This is exactly what the situation that has emerged in recent years is telling us," he said.

Gref said capital outflow was approximately half what it was before, and this was a source of investment.

He said that overall, the situation in the economy was developing quite positively.

"The economy is growing significantly faster than all analysts predicted. The forecasts were around 1-2%. Our forecast today for the end of the year is 3.8% GDP growth," Gref said.

He pointed to growth of household incomes and elevated demand for loans. "This year, we are also significantly above our forecasts for loan portfolio growth," Gref said.