Russian Economic Growth Nears Zero, Sparking Stagnation Concerns
Moscow, Thursday, 4 September 2025.
Russia’s economy faces ‘technical stagnation’ with growth close to zero, as warned by Sberbank’s CEO. High interest rates and geopolitical tensions could impede economic recovery.
Current Economic State
On September 4, 2025, German Gref, the CEO of Russia’s largest bank, Sberbank, warned of the Russian economy entering a phase of ‘technical stagnation’ with growth rates nearing zero. This was a startling revelation as the country’s GDP growth in the second quarter of 2025 was only 1.8%, up slightly from 1.4% in the first quarter, but significantly lower than the previous year’s figures. The Central Bank has projected that growth will slow further in the third quarter, approaching zero by late 2025 [1][2][3].
Impact of High Interest Rates
The Central Bank’s high key interest rates, which are currently at 18% following cuts earlier in 2025, are a significant factor in the economic stagnation. Gref has emphasized that to foster economic recovery, the rate needs to be reduced to around 12%. The high rates have been stifling borrowing, thereby limiting investments and reducing consumer demand [1][3].
Geopolitical and Domestic Challenges
Russia’s economic challenges are compounded by geopolitical tensions and internal factors. The ongoing geopolitical strain has affected commodity prices and the ruble’s exchange rate, further slowing business activities. Additionally, domestic factors such as inflation and underutilization of industries have exacerbated the situation, leading to reduced production and a shift to shorter workweeks in some sectors [1][2][3].
Global Implications
The stagnation of Russia’s economy has significant implications for global markets. As one of the world’s largest economies, Russia’s slowdown could impact international trade and global economic recovery efforts, particularly as geopolitical tensions continue to rise. Moreover, the economic challenges faced by Russia might influence global energy markets, given the country’s pivotal role in energy supply chains [1][3][4].