Gref sees technical stagnation in Russian economy, hopes Central Bank will prevent recession by lowering rate

VLADIVOSTOK. Sept 4 (Interfax) - The Russian economy entered a stage of technical stagnation in Q2, and a significant reduction in the key rate is needed for a revival to occur, Sberbank CEO Herman Gref said.

"The second quarter can in fact be regarded as technical stagnation. July and August are showing fairly clear signs that we are approaching zero levels. And of course, one of the important factors is, naturally, the rate. According to our estimates, which we use internally [at Sberbank], the year-end rate will be about 14%. Is that enough for the economy to start reviving? In our view, it is not. At the current level of inflation, the rate at which one can hope for economic revival is 12% or lower. Therefore, once those levels are reached, most likely we will see the economy revive," Gref said at a briefing during the 2025 Eastern Economic Forum.

He expressed hope that the Central Bank of Russia will not allow a transition into recession, adjusting policy in time while taking into account the full set of incoming data.

The loan portfolio may shift to sustainable growth in H2 2025 if the Central Bank lowers the rate by at least 200 basis points, Gref said.

What matters is not even the nominal rate, but the real one, which in Russia is currently one of the highest in the world, he said.

"It's 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 more difficult than cooling it," Gref said. "That is why for many months now we have been sharing our concerns [based on] predictive macroeconomic parameters that banks receive much faster than regulators receive statistical data. They indicate, of course, that one must be extremely attentive now and take into account the full set of incoming economic data and adjust policy in time."

Experts and businesses are now calling for the use of all tools to support the economy in order to prevent it from slipping into stagnation, he said.

"Let us hope that the second half of the year will still be somewhat more optimistic, and that by the end of the year we will come out with an understanding that we managed to avoid excessive cooling of the economy and a prolonged pause in investment, on which the state of the economy in the next two to three years depends," Gref said.

The Russian economy continues to be affected by such factors as geopolitics, rates, and the exchange rate, he said.

"All of this together, of course, creates a significant number of difficulties. Another factor is the cyclical decline in commodity prices - for the overwhelming majority of commodities that today form the basis of our exports," he said.

All this does not make things easier for businesses. "In this sense, economic policy is never a science, it is an art. It is important to take all these factors into account and to try to recompose them in time so that the economy does not stop, so that there is no sharp halt, which is always very difficult to overcome later," Gref said.