Russian economic growth forecasts will be downgraded shortly, Economic Development Minister Maxim Reshetnikov told an economic forum in the city of Vladivostok, according to a report by Deutsche Presse-Agentur (dpa) citing Russian media reports on Thursday.
The government's official April forecast predicted a 2.5% rise in gross domestic product (GDP) for 2025.
"The latest data indicate that the economy is cooling faster than expected," Interfax news agency quoted Reshetnikov as saying.
German Gref, who served as economy and trade minister from 2000 to 2007 and currently heads Sberbank, the country's largest bank, said Russia faced a "technical recession" in the second quarter.
Growth was expected to come in at close to zero in July and August as well, he said, calling for a cut to interest rates to boost the domestic economy.
Russia has thus far been able to withstand stringent Western sanctions, imposed in response to its February 2022 full-scale invasion of Ukraine, by boosting its war economy.
Growth has risen to as much as 4%, although the non-military economy has been struggling for some time.
High inflation led the central bank to push its key rate as high as 21%. It has since been brought down to 18%, but many businesspeople see the cuts as insufficient.
Finance Minister Anton Siluanov told President Vladimir Putin last week that Russia's economic growth is expected to slow to 1.5% in 2025, far below the earlier 2.5% forecast, as high interest rates imposed to reduce inflation have stifled borrowing.
Pressure is mounting on the central bank – run by Gref's former colleague Elvira Nabiullina – to cut rates at its Sept. 12 meeting, with a slew of warnings from senior officials and influential business chiefs about the impact of high rates.
Gref said he hoped the central bank would heed the warnings and avoid a recession.
"At current inflation levels, the rate at which we can hope for economic recovery is 12% or lower. So somewhere around these levels, we will most likely see economic recovery."
Nabiullina's deputy, Alexei Zabotkin, said on Tuesday that Russia had made substantial progress in fighting inflation but that the central bank was exercising caution in its assessments of inflation reduction to ensure they are not overly premature or overly optimistic.
Reuters reported exclusively in January that Putin had grown increasingly concerned about distortions in Russia's wartime economy, particularly with a cut to investment by major companies due to high interest rates.
