Russia’s biggest bank CEO has warned that the economy has entered “a phase of technical stagnation”. German Herman of Sberbank said the Russian economy slowed sharply from April-June of 2025 and the slowdown is ongoing, according to GDP growth rates. “The second quarter can practically be considered technical stagnation,” Gref said at an economic forum. He added: “July and August show pretty clear signs that we’re getting close to zero (economic growth).”
A graph published in a central bank report this week showed Russia’s gross domestic product shrank for two consecutive quarters, a standard definition of what economists call a technical recession. Russia has had a record-breaking defence spending hampered by shrinking civilian investment and weak private consumption. The International Monetary Fund has slashed Russia’s 2025 growth projection to just 0.9%, a dramatic decline from the 4.3% recorded in the previous year. This makes the most severe downward revision among all major global economies.
Central Bank Chief Elvira Nabiullina said in June that Russia had reached “the edge of capacity,” while Economy Minister Maxim Reshetnikov said the country was “on the verge of a transition to recession.”
Russia’s Economic Development Minister Maxim Reshetnikov acknowledged on yesterday that the country was experiencing a “challenging economic situation” as it grappled with inflation and high interest rates.
Speaking to state broadcaster Russia 1, Reshetnikov revealed that GDP growth had slowed dramatically to just 0.4% year-on-year in July, down from 1% in June. He warned that producer price inflation had stalled, indicating insufficient demand in the economy.
The minister described widespread underutilisation across engineering factories, with some shifting to four-day working weeks whilst others were implementing cost optimisation measures, including labour cost reductions. Whilst he insisted there were no mass redundancies, Reshetnikov characterised these developments as “worrying signs” for the Russian economy.
Asked whether he agreed with Gref, Putin said: “No. He knows, we are in constant contact with him. He participates in many of our meetings, which are held, including those with me, with the government, and the central bank.”