By Gleb Bryanski and Elena Fabrichnaya

ST PETERSBURG (Reuters) – The Russian economy could excessively cool due to high interest rates, facing struggles to grow, stated Alexander Vedyakhin, First Deputy CEO of Sberbank, in a Reuters interview.

“There is a danger of the economy overcooling and that we may not be able to come out of this slump, and further growth could be very restrained,” Vedyakhin noted ahead of Russia’s economic conference in St Petersburg.

He projected a growth rate of 1% to 2% for 2025, lower than the government’s 2.5% forecast. He emphasized the need for regulatory wisdom to manage inflation and avoid production decline.

While he suggested the key interest rate could decrease from 20% to 17%, he underscored the necessity for a rate below 15% to encourage investments.

Regarding the rouble, Vedyakhin stated it’s currently overvalued, projecting it should be around 90-95 per dollar, considering current oil prices and macros.

The rouble’s strength, despite low oil prices, was attributed to high interest rates, a thin forex market, and logistical issues. Meanwhile, Sberbank’s corporate loan portfolio is expected to grow by 9-11% in 2025, though a slowdown from 19% growth previously is anticipated.

Despite challenges, Vedyakhin remains optimistic about potential growth in the latter half of the year, focusing on the necessity for more operational efficiency among firms to survive market pressures.