Eurasia Press & News
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’s most consequential exchanges was between high-ranking officials and state bankers about Russia’s risk of recession. The first to raise the subject was Economic Development Minister Maxim Reshetnikov, who warned, “We are on the brink of transitioning into recession.” However, not all of Reshetnikov’s colleagues agreed. On the sidelines of the forum, Sberbank CEO German Gref made another noteworthy observation, arguing that the ruble’s exchange rate with the U.S. dollar, currently around 78–79 rubles, is far from the “equilibrium rate,” which he estimates at 100 rubles. Meduza reviews these two important debates about Russia’s economic future.
Competing weather forecasts for Russia’s economy
On June 19, SPIEF hosted a session titled “Supply-Side Economics: How to Achieve Growth in the Face of Modern Challenges.” 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’s 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.
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.
The most pessimistic forecast at the session came from Minister Reshetnikov, who said, “By 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.”
Finance Minister Siluanov and Central Bank Governor Nabiullina countered with less gloomy assessments. According to Siluanov, Russia’s economy is merely “cooling,” and “summer always follows cooling.” Nabiullina characterized the economy as “recovering from overheating,” reminding the audience that demand had outpaced supply in Russia’s recent economic growth. “That’s where the overheating and inflation came from,” she explained.
Other influential forum participants also disputed Reshetnikov’s talk of recession. Andrey Kostin, CEO of Russia’s second-largest bank, VTB, stated that he sees no signs of such a dramatic economic downturn. Nevertheless, he said Reshetnikov’s concerns are understandable and used similar weather metaphors, saying Russia’s economy is “icing,” “freezing,” and “cooling.” Kostin also noted that business leaders have complained to him directly about “the difficult situation because credit is very expensive.”
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’s own ministry is even more optimistic, anticipating 2.5-percent GDP growth over the year. The Central Bank, too, expects growth (in the range of 1–2 percent).
But none of this guarantees the economy won’t slide into recession. For example, experts from the Kremlin-linked Center for Macroeconomic Analysis and Short-term Forecasting argue 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.
What’s a ruble worth, really?
On June 20, Sberbank, Russia’s largest bank, hosted its traditional business breakfast — another major SPIEF event. While CEO German Gref had dismissed Maxim Reshetnikov’s “recession brink” warning in sidebar conversations, his remarks at the Sberbank breakfast focused mainly on Russia’s economic troubles. Gref characterized the situation as a “perfect storm,” saying that multiple unfavorable factors are now working against economic growth. Finance Minister Anton Siluanov endorsed this sentiment, agreeing that Russia is currently weathering “serious turbulence.”
Gref warned that profitability is declining for many companies amid high inflation and interest rates. He singled out the Central Bank’s 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 “might not have any debts at all,” Gref explained.
Another contributing factor to the perfect storm is a strong ruble, which Gref said is negatively affecting Russian exporters’ revenues and increasing the government’s budget deficit. He argued that an equilibrium rate that would allow stabilizing the economic situation is “100-plus” rubles per dollar, not the current rate of 78–79 rubles.
Gref’s analysis also drew criticism. Speaking on the sidelines of the forum, Central Bank Monetary Policy Department Director Andrey Gangan said the ruble’s equilibrium rate is the result of a balance between supply and demand in the foreign exchange market: “The rate we see now is the equilibrium; it reflects the objective situation in the economy, even if it doesn’t align with expert opinions and wishes.”
Gangan observed that the ruble is attractive today because the Central Bank’s elevated rates draw investor flows into ruble assets, facilitating the further strengthening of the currency and slowing inflation. “Everyone benefits from low inflation — both citizens and businesses,” 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’t make currency weakness good for Russia’s economy overall.
The official dollar rate on June 20 was 78.48 rubles, which is 23.3 kopecks lower than the previous day’s figure. Overall, Russia’s 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 as the year’s best-performing currency.
