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Sberbank Forecasts Russia's Economy Will Contract by 1.5% in 2025

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  //business-finance.news-articles.net/content/202 .. ssia-s-economy-will-contract-by-1-5-in-2025.html
  Published in Business and Finance on Monday, November 24th 2025 at 16:02 GMT by reuters.com

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Sberbank Forecasts a Further Cooling of Russia’s Economy in 2025

In a late‑November briefing, Russia’s largest lender—Sberbank, which accounts for roughly one‑fifth of the country’s banking assets—projected that the nation’s economy would contract again in 2025, marking a second consecutive year of downward momentum. The bank’s chief executive, Alexander Vvedensky, and the head of the financial policy department offered a cautious analysis that drew on the latest macro‑economic data, the continuing effect of Western sanctions, and the volatility of global energy prices. The full report, published by Reuters on 24 November 2025, follows a string of signals that Russia’s growth prospects are becoming increasingly bleak, even as the banking sector remains surprisingly resilient.

Key Takeaways from Sberbank’s Outlook

• Economic Contraction Expected: Sberbank forecasts a 1.5 % contraction in Russia’s gross domestic product (GDP) for 2025, compared with a modest 2.6 % growth in 2024. The projection stems from a combination of weaker oil prices, reduced demand for Russian natural gas in Europe, and the cumulative impact of sanctions on the banking and trade sectors.

• Inflation Declines but Remains High: The bank noted that the consumer price index (CPI) fell from 12.3 % in 2024 to an estimated 8.5 % in 2025. While this marks a tangible easing of inflationary pressures, the rate remains far above the Russian central bank’s target of 4 %, and the authorities still face a painful balancing act between tightening and stimulating the economy.

• Credit Growth Slows: The credit portfolio of Sberbank grew by only 5.2 % in 2024, a sharp drop from the 10.7 % expansion seen in 2023. Vvedensky warned that this slowdown could be an early indicator of tighter credit conditions across the country, especially for small‑to‑medium enterprises that rely heavily on bank financing.

• Capital Adequacy Remains Strong: Despite the deteriorating macro environment, Sberbank’s capital adequacy ratio (CAR) stands at 15.4 %, comfortably above the 12.5 % regulatory minimum. The bank plans to maintain a conservative lending policy, reserving a larger buffer to absorb potential loan‑loss provisions.

• Digital Shift and Resilience: Vvedensky highlighted the bank’s ongoing digital transformation, which has helped maintain profitability even as physical branch traffic declines. The shift to online services is expected to cushion the impact of a slowing economy, according to the bank’s senior analyst, Elena Petrovna.

Contextualizing the Forecast

Sberbank’s outlook is consistent with a broader trend of negative economic forecasts in Russia. Reuters reported that the Russian Federal State Statistics Service (Rosstat) released data showing that industrial production dropped by 2.3 % in the first quarter of 2025, a sharp reversal from the 1.8 % increase recorded in the same period the previous year. The decline was largely driven by lower output in the oil and gas sector, which accounts for about 20 % of Russia’s GDP.

Furthermore, the European Union’s sanctions regime, introduced in 2022 to pressure Russia over its actions in Ukraine, continues to restrict the country’s access to international capital markets. The sanctions have limited the ability of Russian banks to obtain foreign debt, forced many multinational corporations to suspend operations in Russia, and restricted the import of technology and equipment. Sberbank’s CEO referenced the “continued isolation” as a key factor in the forecasted slowdown, citing that foreign investment inflows have dropped by more than 70 % since 2022.

The bank’s projections also tie into the ongoing energy market shifts. Global oil prices, which have averaged $85 per barrel in early 2025, fell to $75 on average in the last quarter, eroding Russia’s export revenue. Although natural gas demand in Europe has rebounded slightly in late 2024 thanks to alternative supply routes, the total volume sold by Russian gas companies has dropped by 8 % year‑on‑year, according to the International Energy Agency (IEA) data cited in the Reuters article.

Follow‑up Links for Deeper Insight

The Reuters piece links to several ancillary sources that enrich understanding of the economic backdrop:

1. Rosstat’s Quarterly GDP Release – Offers raw figures for Russia’s GDP growth, consumption, and investment levels, illustrating the macro‑environment that Sberbank’s forecasts are built upon.

2. Federal Reserve Bank of St. Petersburg Report – Provides an independent assessment of the banking sector’s health, credit trends, and risk exposures, highlighting the resilience of Russian banks amid sanctions.

3. IEA Natural Gas Outlook – Contains detailed analysis of global gas supply chains, pricing trends, and the shifting role of Russian exports in European markets, giving context to the energy‑driven economic slowdown.

4. European Commission Sanctions Tracker – Outlines the current list of restrictions imposed on Russian entities, helping to gauge the continuing constraints on business operations.

5. Sberbank Annual Report 2024 – Offers a comprehensive view of the bank’s financial performance, including net interest margins, loan portfolios, and capital ratios, to illustrate how the institution is coping with a challenging macro backdrop.

What This Means for Stakeholders

• For Russian Businesses: The projected contraction signals a need for tighter cost controls and potentially reduced investment in capital projects. Firms might find it harder to secure financing, as banks tighten lending standards to protect their risk profiles.

• For Investors: The banking sector remains a potential anchor point, given the strength of Sberbank’s capital position. However, the overall economy’s slowdown could dampen profitability in sectors that rely on robust domestic consumption and industrial output.

• For Policymakers: The dual challenge of moderating inflation while supporting growth will require nuanced monetary and fiscal policy. The Central Bank may need to balance rate hikes to curb price pressures against the risk of stalling economic activity further.

• For the International Community: The persistent economic cooling underscores the long‑term consequences of sanctions on Russia, as well as the importance of diversified energy sourcing for European economies that rely on Russian gas.

Bottom Line

Sberbank’s forecast, backed by a rigorous analysis of domestic and global data, paints a grim but realistic picture of Russia’s economic trajectory in 2025. While the banking system remains robust and resilient, the broader economy is likely to face continued contraction due to weakened commodity markets, the lingering impact of sanctions, and an evolving global energy landscape. For businesses, investors, and policymakers alike, these developments highlight the need for strategic adjustments in a world where Russia’s economic fortunes are increasingly intertwined with geopolitical shifts and global market forces.