Russia’s economy stalls, says Sberbank chief

Russia’s economy effectively stopped growing in the second quarter of 2025: production, investment, and incomes barely increased, while business activity slowed sharply. This indicates the country has slipped into economic stagnation.

“The second quarter can essentially be considered technical stagnation. July and August show clear signs that we are approaching zero growth,” said German Gref, head of Russia’s largest bank, Sberbank, according to Interfax.

Gref said that stagnation was driven by a mix of geopolitical factors, fluctuations in the ruble, and falling commodity prices.

The biggest drag remains the Central Bank’s high key interest rate of 14%. Expensive credit has curbed consumer spending and business investment.

Russia’s economy is also under pressure from sanctions, global market uncertainty, and rising business costs. Without changes in financial policy, Gref said, the country risks remaining stuck in stagnation for a long time.

The International Monetary Fund forecasts that after two years of “war-driven boom,” Russia’s economy will return to weak growth. The IMF projects GDP growth of just 0.9% in 2025 and 1% in 2026, compared to 4.1% in 2024.

Earlier, Bloomberg reported that Russia’s economy is weakening under the strain of prolonged war and sanctions, with key industries in decline and banks potentially requiring state intervention to stabilize.