Russia Could Be Headed for Recession
Russia could be teetering on the edge of a recession as it straddles the double-edged sword of sanctions and a growing war budget.
German Gref, Sberbank’s veteran CEO, told the Eastern Economic Forum in Russia that fresh data showed the country’s growth had slumped to nearly zero. GDP figures from July and August, he said, pointed to a sharp deceleration following an already sluggish second quarter.
“The economy is approaching zero,” Gref warned, adding that unless interest rates were cut decisively, Russia risked sliding into recession.
The central bank, in an effort to curb soaring inflation, pushed borrowing costs as high as 21% last autumn. The current benchmark stands at 18%. While authorities argue that this is necessary to stabilize the ruble and prevent runaway prices, Gref insisted that lower rates were essential “to revitalise the economy.”
He forecast that the key rate might fall to around 14% by year’s end but suggested that only a reduction to 12% or below would spur meaningful recovery.
What Lies Ahead for Russia
Other prominent figures in Russian business circles echoed the concern. Alexander Shokhin, president of the Russian Union of Industrialists and Entrepreneurs, told Euronews that lending across sectors has slowed down, and said rates ought to be cut to 16% soon.
He also admitted that 10–12% could be “acceptable” for continuing growth into 2026.
The warnings come as international experts increasingly argue that Russia’s post-2022 resilience may have peaked. After registering modest growth last year, the economy is expected to expand by just 2% in 2025.
Analysts point to the cumulative effect of sanctions, declining access to Western technology, and Ukraine’s strikes on Russian oil refineries and other infrastructure. According to Kyiv, nearly a fifth of Russia’s refining capacity has been disrupted.
What Happens Next?
The Kremlin, however, is determined to project confidence. President Vladimir Putin arrived in Vladivostok from Beijing to open the tenth Eastern Economic Forum, an event that has long been used to showcase Russia’s supposed “pivot to Asia.” Organisers said delegates from 70 countries were attending, but the stark reality is that Russia is becoming more reliant on fewer partners, especially Beijing.
A 35th Fighter Squadron F-16 Fighting Falcon flies near the Korean peninsula during a dogfighting training scenario during exercise Ulchi Freedom Shield 25 at Kunsan Air Base, Republic of Korea, Aug. 20, 2025. UFS25 is a combined, joint, all-domain military training exercise that integrates ground, air, naval, space, cyber and information elements, enhancing readiness through realistic combat simulations. (U.S. Air Force photo by Senior Airman Landon Gunsauls)
The contradiction is stark: a war economy pouring resources into defense and energy projects but neglecting household demand and private enterprise.
Even senior insiders such as Gref, typically cautious in public remarks, are now openly admitting that the model is unsustainable.
The question is less whether Russia’s economy is stagnating than how much longer the Kremlin can continue to pretend otherwise.
About the Author: Georgia Gilholy
Georgia Gilholy is a journalist based in the United Kingdom who has been published in Newsweek, The Times of Israel, and the Spectator. Gilholy writes about international politics, culture, and education. You can follow her on X: @llggeorgia.
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