Russian economy faces 10 years of recession without reforms – Sberbank CEO
Russia’s economy will return to 2021 levels within a decade unless the country takes reform steps amid unprecedented Western sanctions over Russia’s war in Ukraine, the head of the country’s biggest lender has said , Sberbank said Friday.
“If nothing is done in the current situation, then… it could take about 10 years for the Russian economy to return to the level of 2021,” Sberbank CEO Herman Gref said.
In its so-called “inertia” scenario, Sberbank predicts that Russia’s GDP will fall by 7% in 2022 and by 10.3% in 2023 compared to 2021, when it increased by 4.7% to 1 $770 billion.
The decline would drop to single digits in subsequent years and reach -0.1% by 2030, according to a drag Sberbank forecasts at the St. Petersburg International Economic Forum (SPIEF), Russia’s annual showcase event for investors.
But Gref pointed out that Russia redirected 73% of oil deliveries to eastern countries in April and May.
“External conditions have long since changed, perhaps forever,” Central Bank Governor Elvira Nabiullina said at a SPIEF event on Thursday. “It’s obvious to everyone that it won’t be like before.”
Gref said 56% of Russian exports and 51% of imports represented countries that imposed sanctions on the country.
“It’s a threat to 15% of the country’s GDP.”
The Kremlin expressed confidence in its determination to overcome Western sanctions.
Sberbank, which owns a third of Russia’s banking sector assets, has suffered funding problems following harsh Western sanctions aimed at cutting off Russian banks’ access to capital markets.
Sberbank said in March it was exiting the European market under pressure from EU sanctions, which were tightened in May to include its expulsion from the SWIFT international payment system.
U.S. blackout sanctions in April banned business with the bank and froze its assets in the U.S. financial system.
Gref told SPIEF that the Russian banking sector is likely to suffer losses this year.