The Russian economy entered a period of “technical stagnation” in Q2 of 2025, Sberbank CEO German Gref said at the Eastern Economic Forum in Vladivostok on Wednesday.
“The second quarter can essentially be considered technical stagnation. July and August show fairly clear signs that we’re approaching zero growth,” Gref said, according to Russian news agency Interfax.
One key factor is the Central Bank’s key interest rate, he said. Sberbank estimates the rate, currently at 18 percent, will be lowered to 14 percent by the end of the year. But according to Gref, that’s not enough to revive the economy.
“At current inflation levels, the rate at which we can expect the economy to pick up would be 12 percent or lower. So once we get to those levels, that’s probably when we’ll see an economic recovery,” the Sberbank chief said.
“It’s important to get out of this period of controlled cooling so it doesn’t turn into stagnation. Restarting the economy later will be much harder than slowing it down now. […] Let’s hope the Central Bank doesn’t allow it to slip into a recession,” Gref told TASS.
From the datapoints I’ve seen, the civilian economy is essentially already in stagnation-recession, while the the military economy is still growing a bit but not nearly enough to balance out the other.
Russia entering a full recession (which is a distinct possibility next year) will mean things in the civilian economy are so disastrous that the trillions of rubles in military spending cannot overcome the slowdown back home
battywombat21 on
I’m curious as to how the ukranian economy is holding up. Hopefully their budget is still being propped up by western backers? I imagine it’s not great though.
3 Comments
The Russian economy entered a period of “technical stagnation” in Q2 of 2025, Sberbank CEO German Gref said at the Eastern Economic Forum in Vladivostok on Wednesday.
“The second quarter can essentially be considered technical stagnation. July and August show fairly clear signs that we’re approaching zero growth,” Gref said, according to Russian news agency Interfax.
One key factor is the Central Bank’s key interest rate, he said. Sberbank estimates the rate, currently at 18 percent, will be lowered to 14 percent by the end of the year. But according to Gref, that’s not enough to revive the economy.
“At current inflation levels, the rate at which we can expect the economy to pick up would be 12 percent or lower. So once we get to those levels, that’s probably when we’ll see an economic recovery,” the Sberbank chief said.
“It’s important to get out of this period of controlled cooling so it doesn’t turn into stagnation. Restarting the economy later will be much harder than slowing it down now. […] Let’s hope the Central Bank doesn’t allow it to slip into a recession,” Gref told TASS.
Further reading:
[As the Kremlin stalls on peace talks, Russia’s economy shows mounting strain — Meduza](https://meduza.io/en/feature/2025/08/21/as-the-kremlin-stalls-on-peace-talks-russia-s-economy-shows-mounting-strain)
[Russia’s Putin denies economy is stagnating, as evidence suggests otherwise | Reuters](https://www.reuters.com/business/finance/russias-putin-denies-economy-is-stagnating-evidence-suggests-otherwise-2025-09-05/)
[The ‘Fortress Russia’ economy has adapted well to pressure. But stagflation presents an opportunity for the West | Chatham House – International Affairs Think Tank](https://www.chathamhouse.org/2025/09/fortress-russia-economy-has-adapted-well-pressure-stagflation-presents-opportunity-west)
[Amid Russian economy warnings, Putin admits Central Bank ‘struggling’ to cut interest rates](https://kyivindependent.com/putin-admits-russias-central-bank-struggles-to-cut-rates-warns-prices-would-rise/) – Kyiv Independent
[Russia’s Labor Shortage Persists Despite Central Bank Optimism – The Moscow Times](https://www.themoscowtimes.com/2025/07/31/russias-labor-shortage-persists-despite-central-bank-optimism-a90044)
!ping Rus&Econ
From the datapoints I’ve seen, the civilian economy is essentially already in stagnation-recession, while the the military economy is still growing a bit but not nearly enough to balance out the other.
Russia entering a full recession (which is a distinct possibility next year) will mean things in the civilian economy are so disastrous that the trillions of rubles in military spending cannot overcome the slowdown back home
I’m curious as to how the ukranian economy is holding up. Hopefully their budget is still being propped up by western backers? I imagine it’s not great though.