Russia bank boss issues dire economic warning

The head of one of the largest banks in Russia has said that the country’s economy is overheating due to the war in Ukraine.

Since Moscow’s invasion of Ukraine in February 2022, Russia’s economy has been hit by sanctions placed on it by the global community. Western nations were the most severe with sanctions, particularly on Russia’s trade industry. Despite this, increased wartime activities have meant the Russian economy grew by 3.6% last year.

However, the CEO of Russia’s largest bank, Sberbank, has now said that this growth is a sign of an overheated economy. Herman Gref, speaking at the Federation Council in the Russian legislature on June 4, is reported to have said: “Our economy is definitely and strongly overheated.

“We have never had such main capacity utilization in our history. At the level of 84 percent – this is threshold where it is merely impossible to go above it. And huge funds are going to the economy via the budget impulse.”

Gref also stressed the need for Russia to develop greater countermeasures against artificial intelligence, saying: “It is possible to efficiently counter such attacks only when having a higher level of such technologies.

“Plenty of cybercrimes are now committed using ‘an army.’ An ‘army’ of Ukraine, an ‘army’ of the U.S. are now working against us; we see this in full scope. Certainly, all these modern attacks are made with the help of artificial intelligence”.

Gref previously served as Minister of Economics and Trade in the Russian cabinet before leaving in 2007, when he was elected as president of Sberbank, which is state-owned. He also remains a trustee at the World Economic Forum.

Despite international condemnation of Russia’s actions in Ukraine, and significant impacts of sanctions on the economy, Russia has maintained growth by generating demand for military goods and services.

However, other key areas of the economy are feeling the strain. On June 5, Russia’s Ministry of Economic Development released figures showing that annual inflation had risen to 8.17 percent. In March 2023, Federation Council Deputy Speaker Galina Karelova claimed that over 8.4 million jobs had been put at risk due to the international pressure, particularly those at international companies based in the West.

It’s not the first time big stakeholders in the Russian economy have made warnings like this. In December last year, central bank governor Elvira Nabiullina made a similar prediction, saying: “The economy is expanding so rapidly because it is using almost all the resources available. A stubborn high inflation is evidence that the economy has deviated from its potential and lacks capacities to meet soaring demand.”

Newsweek contacted the Kremlin for comment but did not receive an immediate reply.