<\/p>\n
The St. Petersburg International Economic Forum is known for the noise it generates in the news media, but SPIEF also hosts some substantive discussions. This year, one of the forum\u2019s most consequential exchanges was between high-ranking officials and state bankers about Russia\u2019s risk of recession. The first to raise the subject was Economic Development Minister Maxim Reshetnikov, who warned, \u201cWe are on the brink of transitioning into recession.\u201d However, not all of Reshetnikov\u2019s colleagues agreed. On the sidelines of the forum, Sberbank CEO German Gref made another noteworthy observation, arguing that the ruble\u2019s exchange rate with the U.S. dollar, currently around 78\u201379 rubles, is far from the \u201cequilibrium rate,\u201d which he estimates at 100 rubles. Meduza reviews these two important debates about Russia\u2019s economic future.<\/p>\n
Competing weather forecasts for Russia\u2019s economy<\/strong><\/p>\n On June 19, SPIEF hosted a session titled \u201cSupply-Side Economics: How to Achieve Growth in the Face of Modern Challenges<\/a>.\u201d Andrey Makarov, chairman of the State Duma Committee on Budget and Taxes, moderated a discussion that included Economic Development Minister Maxim Reshetnikov, Finance Minister Anton Siluanov, and Central Bank Governor Elvira Nabiullina. One of Makarov\u2019s key questions was whether the discussants would characterize the current state of the Russian economy as a recession or a cooling-off after a period of rapid growth.<\/p>\n A recession occurs when gross domestic product (GDP), industrial production levels, real household incomes, and other key indicators decline for at least two consecutive quarters. Russian GDP grew by 1.4 percent year-over-year in the first quarter of 2025, although it grew at a pace of 4.5 percent in the last three months of 2024. This sharp slowdown has alarmed officials and experts, prompting talk of recession.<\/p>\n The most pessimistic forecast at the session came from Minister Reshetnikov, who said, \u201cBy the numbers, we have cooling right now, yes. But all our numbers are a rearview mirror. And based on current business sentiment, it seems to me we are on the brink of transitioning into recession.\u201d<\/p>\n Finance Minister Siluanov and Central Bank Governor Nabiullina countered with less gloomy assessments. According to Siluanov, Russia\u2019s economy is merely \u201ccooling,\u201d and \u201csummer always follows cooling.\u201d Nabiullina characterized the economy as \u201crecovering from overheating,\u201d reminding the audience that demand had outpaced supply in Russia\u2019s recent economic growth. \u201cThat’s where the overheating and inflation came from,\u201d she explained.<\/p>\n Other influential forum participants also disputed Reshetnikov\u2019s talk of recession. Andrey Kostin, CEO of Russia\u2019s second-largest bank, VTB, stated<\/a> that he sees no signs of such a dramatic economic downturn. Nevertheless, he said Reshetnikov\u2019s concerns are understandable and used similar weather metaphors, saying Russia\u2019s economy is \u201cicing,\u201d \u201cfreezing,\u201d and \u201ccooling.\u201d Kostin also noted that business leaders have complained to him directly about \u201cthe difficult situation because credit is very expensive.\u201d\u00a0<\/p>\n Kostin pointed out that VTB analysts predict modest but positive growth of 1.5 percent for the Russian economy in 2025. The forecast from Reshetnikov\u2019s own ministry is even more optimistic<\/a>, anticipating 2.5-percent GDP growth over the year. The Central Bank, too, expects growth<\/a> (in the range of 1\u20132 percent).<\/p>\n But none of this guarantees the economy won\u2019t slide into recession. For example, experts from the Kremlin-linked Center for Macroeconomic Analysis and Short-term Forecasting argue<\/a> that an economic downturn is already visible in industrial sectors outside those driven by war-related spending. In the first quarter of 2025, civilian goods production dropped 0.8 percent each month.<\/p>\n Nepo babies and Kremlin Labubu dolls The stranger sights at this year\u2019s St. Petersburg International Economic Forum<\/a>Nepo babies and Kremlin Labubu dolls The stranger sights at this year\u2019s St. Petersburg International Economic Forum<\/a>What\u2019s a ruble worth, really?<\/strong><\/p>\n On June 20, Sberbank, Russia\u2019s largest bank, hosted its traditional business breakfast \u2014 another major SPIEF event. While CEO German Gref had dismissed Maxim Reshetnikov\u2019s \u201crecession brink\u201d warning in sidebar conversations, his remarks<\/a> at the Sberbank breakfast focused mainly on Russia\u2019s economic troubles. Gref characterized the situation as a \u201cperfect storm,\u201d saying that multiple unfavorable factors are now working against economic growth. Finance Minister Anton Siluanov endorsed this sentiment, agreeing that Russia is currently weathering \u201cserious turbulence<\/a>.\u201d\u00a0<\/p>\n Gref warned that profitability is declining for many companies amid high inflation and interest rates. He singled out the Central Bank\u2019s 20-percent key rate, saying it creates payment problems for enterprises, some of which lack sufficient cash flow to service and attract loans. This has a chain effect on healthier counterparts that \u201cmight not have any debts at all,\u201d Gref explained.<\/p>\n Another contributing factor to the perfect storm is a strong ruble, which Gref said is negatively affecting Russian exporters\u2019 revenues and increasing the government\u2019s budget deficit. He argued that an equilibrium rate that would allow stabilizing the economic situation is \u201c100-plus\u201d rubles per dollar, not the current rate of 78\u201379 rubles.<\/p>\n Gref\u2019s analysis also drew criticism. Speaking on the sidelines of the forum, Central Bank Monetary Policy Department Director Andrey Gangan said<\/a> the ruble\u2019s equilibrium rate is the result of a balance between supply and demand in the foreign exchange market: \u201cThe rate we see now is the equilibrium; it reflects the objective situation in the economy, even if it doesn\u2019t align with expert opinions and wishes.\u201d\u00a0<\/p>\n Gangan observed that the ruble is attractive today because the Central Bank\u2019s elevated rates draw investor flows into ruble assets, facilitating the further strengthening of the currency and slowing inflation. \u201cEveryone benefits from low inflation \u2014 both citizens and businesses,\u201d he said. At the same time, Gangan acknowledged that a weaker ruble would help exporters maintain profits during global downturns, but he insisted this doesn\u2019t make currency weakness good for Russia\u2019s economy overall.<\/p>\n The official dollar rate on June 20 was 78.48 rubles, which is 23.3 kopecks lower than the previous day\u2019s figure. Overall, Russia\u2019s currency has demonstrated paradoxical results in 2025: from January through April, it strengthened against the dollar by 38 percent, and in April, it was recognized by Bloomberg<\/a> as the year\u2019s best-performing currency.<\/p>\n Translation by Kevin Rothrock<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"The St. Petersburg International Economic Forum is known for the noise it generates in the news media, but…\n","protected":false},"author":3,"featured_media":1302,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[12],"tags":[64,79,67,132,68,1796,1791,1794,1783,1776,1788,1778,1789,1795,1784,1772,1779,1773,1781,1782,1774,1777,1775,1793,1787,1780,1792,1790,1786,1785],"class_list":{"0":"post-1301","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-economy","8":"tag-business","9":"tag-economy","10":"tag-united-states","11":"tag-unitedstates","12":"tag-us","13":"tag-1796","14":"tag-1791","15":"tag-1794","16":"tag-1783","17":"tag-1776","18":"tag-1788","19":"tag-1778","20":"tag-1789","21":"tag-1795","22":"tag-1784","23":"tag-1772","24":"tag-1779","25":"tag-1773","26":"tag-1781","27":"tag-1782","28":"tag-1774","29":"tag-1777","30":"tag-1775","31":"tag-1793","32":"tag-1787","33":"tag-1780","34":"tag-1792","35":"tag-1790","36":"tag-1786","37":"tag-1785"},"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@us\/114719329091981428","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts\/1301","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/comments?post=1301"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts\/1301\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/media\/1302"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/media?parent=1301"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/categories?post=1301"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/tags?post=1301"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}