Russias economy is at risk of cooling down excessively in the middle of an extended duration of high rate of interest and could face challenges returning to a growth course, atop executive at Russias biggest lending institution, Sberbank, has warned.There is a threat of the economy overcooling which we might not have the ability to come out of this slump, and more growth could be very restrained, Sberbank First Deputy CEO Alexander Vedyakhin informed Reuters on Wednesday.Vedyakhin forecasted Russias GDP to grow just 1 to 2% this year, less than the governments forecast of2.5%.
Russias Central Bank reduced its essential rate of interest to 20% from a historic high of 21% this month, trying to keep inflationary pressure from the overheating war economy at bay while responding to growing political pressure to ease loaning costs.My sense is that, probably, the Central Banks essential rate might be around 17% by the end of this year.
I dont believe the Central Bank will sharply decrease the rate as there is a risk that inflation might increase again, Vedyakhin said.He argued that a more significant rate cut is required to stimulate recovery.A smart financier with such an EBITDA margin might carry out new projects.
I think that a rate below 15%, that is, approximately speaking, 12-14%, is already a good level for the economy to begin restoring, growing and moving forward, he said.Vedyakhin likewise pointed to what he referred to as a misestimated ruble.
He associated the currencys strength to high interest rates, a weakened domestic foreign exchange market, logistical troubles, payment problems and foreign currency sales from the fiscal reserve.In the view of our analysts, the ruble is currently overvalued.
If everything were fairly well balanced, given the current oil prices and macroeconomic factors, it needs to be at the level of 90-95 per dollar, he said.The remarks come as high-level authorities reveal concern over the countrys financial trajectory.Kremlin Deputy Chief of Staff Maxim Oreshkin just recently stated that Russias current development model has tired itself and called for a leap to an advanced technological and organizational level.President Vladimir Putin has also acknowledged the cooling trend, advising federal government authorities to act thoroughly and prevent extreme cooling, like in a cryochamber.