Russian economy is stagnating amid Ukraine war, says Sberbank CEO

The head of Russia's largest bank has said the country's economy has reached a stage of "technical stagnation."

Speaking at the Eastern Economic Forum in the Russian city of Vladivostok, German Gref, who runs Sberbank, said that Russia would have to slash interest rates to avoid a recession.

GDP data from July and August showed "quite clear symptoms that we are approaching zero," after figures from the second quarter of the year revealed signs of economic stagnation, Gref noted.

As the significant cost of Russia's war against Ukraine was sparking inflation, Russia's central bank increased interest rates to 21% in October.

It subsequently lowered them, with the current rate standing at 18%.

Gref, who is one of Russia's top bankers, said that dropping the key interest rate was needed "to revitalise the economy."

"According to our estimates, which we are using internally for the end of the year, the rate will be around 14%," Gref said.

"Is this enough for the economy to start to revive? In our opinion, not enough, and at current inflation levels, the rate at which we can hope to revitalise the economy is 12% or lower," he added.

With a slowdown in lending visible in all segments of the Russian market, Alexander Shokhin, the president of the Russian Union of Industrialists and Entrepreneurs (RSPP), suggested that the key rate must be lowered to 16%.

According to him, "10-12% is an acceptable rate for the economy for the next year, if not the optimal rate."

Experts say the Russian economy passed its peak last year, with growth down to 2% this year.

Many observers note that the performance of the Russian economy has begun to be affected by international sanctions and by the Ukrainian army's successful strikes on oil refineries and other Russian military-related facilities.

The 10th Eastern Economic Forum is taking place in Vladivostok from 3-6 September. Organisers say representatives from 70 countries are taking part.

Russian President Vladimir Putin arrived in east Russian city from China on Thursday.