Sberbank's CEO asserts that Russia's economy is experiencing a standstill due to the ongoing conflict with Ukraine.

In the heart of September, the 10th Eastern Economic Forum is underway in Vladivostok, with representatives from 70 countries in attendance. However, amidst the global discussions, the Russian economy is grappling with a significant challenge.

German Gref, the head of Russia's largest bank, Sberbank, has raised concerns about the country's economic state, stating that it has reached a stage of "technical stagnation." This comes as no surprise, given the intensifying pressure on Russia's economy due to the ongoing full-scale invasion of Ukraine.

The current interest rate in Russia stands at a high 18%, but Gref believes that a rate of 12% or lower is needed to revitalize the economy, given the current inflation levels. According to his internal estimates, the year-end rate might be around 14%, which he considers insufficient for revitalization. Alexander Shokhin, president of the Russian Union of Industrialists and Entrepreneurs (RSPP), suggests a key rate of 16% as potentially needed to revitalize the Russian economy.

The performance of the Russian economy has been significantly affected by international sanctions and the Ukrainian army's successful strikes on oil refineries and other Russian military-related facilities. These attacks have knocked out 17% of Russia's oil refining capacity, creating shortages and disrupting exports. The significant cost of Russia's war against Ukraine has sparked inflation, further complicating the economic situation.

In an attempt to combat this, Gref has suggested that Russia should lower interest rates to avoid a recession. Shokhin echoes this sentiment, considering a key rate of 10-12% as acceptable for the Russian economy next year.

Despite these challenges, the second quarter of the year revealed signs of economic stagnation, with GDP data showing "quite clear symptoms that we are approaching zero." In July and August, these symptoms became even more pronounced, according to Gref.

As the Russian economy continues to face these challenges, the future remains uncertain. However, the ongoing discussions at the Eastern Economic Forum offer a glimmer of hope for potential solutions and a path towards economic recovery. Russian President Vladimir Putin's recent arrival in an east Russian city from China may also signal a renewed focus on economic matters.

Sberbank's CEO asserts that Russia's economy is experiencing a standstill due to the ongoing conflict with Ukraine.