The CEO of Sberbank, German Gref, remarked on Friday that the interplay of elevated interest rates and an overvalued ruble is creating a “perfect storm” that could hinder investment and negatively impact Russia’s economic growth over the coming years.
“We are confronted with a significant array of challenges that we can describe as a perfect storm,” Gref stated during a breakfast event organized by Sberbank at the annual St. Petersburg International Economic Forum (SPIEF).
He pointed out that real interest rates are eroding business profits and compelling firms to delay their investment decisions. These real interest rates represent the gap between the Russian Central Bank’s key rate of 20% and the annual inflation rate, which is just below 10%.
“This poses a risk to economic growth not just for this year, but also in the next two to three years,” Gref warned, forecasting that the Central Bank might lower the rate to 15% by the conclusion of 2025.
In the first quarter of 2025, Russia’s economy grew by only 1.4% year-on-year, marking its slowest growth rate in two years. The World Bank projects a similar growth rate of 1.4% for the entirety of the year, following two years of state-driven growth propelled by wartime spending.
Economists have cautioned that this development is not sustainable and conceals a stagnation in productivity.
Gref also expressed concern regarding the recent rise of the ruble, indicating that it is detrimental to Russia’s export-reliant budget. The ruble has appreciated for six consecutive months, stabilizing this week at around 78 rubles per U.S. dollar.
“In reality, a more equitable rate would be 100 rubles or higher per dollar,” remarked the Sberbank chief.
Finance Minister Anton Siluanov, who is also present at SPIEF 2025 this week, acknowledged the dual challenges posed by high rates and a strong ruble but dismissed the idea of further changes to the tax system that could disrupt predictability.
Last year, Russia implemented major tax reforms that took effect at the beginning of 2025, which introduced a progressive income tax and raised corporate contributions to the federal budget.
