Sberbank CEO German Gref warned Friday that a combination of high interest rates and an overvalued ruble was creating a “perfect storm” that could stunt investment and weigh down on Russia’s economic growth in the years ahead.

“We’re facing a large set of problems that can be called a perfect storm,” Gref said during a Sberbank-organized breakfast at the annual St. Petersburg International Economic Forum (SPIEF).

He said real interest rates were cutting into business profits and forcing companies to postpone investment decisions. Real interest rates reflect the difference between the Russian Central Bank’s key rate of 20% and annual inflation of just under 10%

“That’s a threat to economic growth not only this year, but also for the next two to three years,” Gref said, predicting the Central Bank would cut the rate to 15% by the end of 2025.

Russia’s economy expanded just 1.4% year-on-year in the first quarter of 2025 — its slowest pace in two years. The World Bank forecasts similarly sluggish growth of 1.4% for the full year, following two years of state-driven expansion fueled by wartime spending.

Economists have warned that this growth is unsustainable and masks underlying productivity stagnation.