Sberbank Chief Highlights Brewing Economic Crisis Amid High Interest Rates and Strong Ruble

Sberbank’s CEO, German Gref, cautioned on Friday that the combination of elevated interest rates and an overvalued ruble is forming a “perfect storm” that could hinder investment and negatively impact Russia’s economic growth in the coming years.

“We’re confronted with a considerable array of challenges that can be characterized as a perfect storm,” Gref remarked during a breakfast event organized by Sberbank at the annual St. Petersburg International Economic Forum (SPIEF).

He noted that real interest rates are diminishing business profits and compelling companies to delay investment decisions. Real interest rates are determined by the difference between the Russian Central Bank’s key rate of 20% and the annual inflation rate, which is slightly below 10%.

“This poses a threat to economic growth not only for this year but for the next two to three years as well,” Gref warned, anticipating that the Central Bank would decrease the rate to 15% by the end of 2025.

Russia’s economy grew by only 1.4% year-on-year in the first quarter of 2025, marking its slowest growth in two years. The World Bank projects a similar sluggish growth rate of 1.4% for the entire year, following two years of state-driven expansion supported by wartime expenditures.

Economists have cautioned that such growth is not sustainable and conceals a stagnation in productivity.

Gref also expressed concern about the recent strengthening of the ruble, indicating that it is detrimental to Russia’s export-reliant budget. The ruble has appreciated for six consecutive months, currently stabilizing at approximately 78 rubles per U.S. dollar this week.

“In reality, a more appropriate exchange rate would be 100 rubles or more per dollar,” stated the CEO of Sberbank.

Finance Minister Anton Siluanov, who is also present at SPIEF 2025 this week, acknowledged the combined pressures of high interest rates and a robust ruble, but dismissed any further adjustments to the tax system that could jeopardize predictability.

Last year, Russia implemented extensive tax reforms that took effect at the beginning of 2025, instituting a progressive income tax and increasing corporate contributions to the federal budget.