VTB's Bold 2025 Forecast: Optimism Amid Economic Challenges

VTB, Russia's second-largest bank, anticipates a 2025 GDP growth of 1.9%, exceeding the IMF's 1.3% forecast. CEO Andrei Kostin predicts inflation will decrease to 6.4% despite high military expenditures and sanctions. However, ineffective interest rate adjustments may lead to a rate increase up to 23% this year.

Russia's second-largest bank, VTB, has projected a more optimistic economic outlook for 2025 than the International Monetary Fund (IMF). In an interview with Reuters, CEO Andrei Kostin forecasted that Russia's GDP would rise by 1.9% by 2025, surpassing the IMF's 1.3% estimation.

Kostin suggested that inflation could slow to 6.4% from the current rate of 8.5%, although he acknowledged the challenges posed by substantial military expenditures and sanctions. He expressed concerns about the limited effectiveness of using key interest rates to manage inflation, citing factors like insensitive loan volumes.

Looking ahead, Kostin noted that while lending growth, a contributor to inflation, would reduce to 10% next year from 20% in 2024, the current interest rates could reach as high as 23% by the end of the year. This trend reflects ongoing borrowing at elevated rates as companies strive to complete projects.

(With inputs from agencies.)