Russian economy meltdown as 'depositor panic' risks 'run on the banks' in Moscow

By Jon King, News Reporter

Russia's turbulent economy has raised the risk of a run on its banks, a non-profit warns (Image: Getty)

Russia's turbulent economy has raised the risk of a run on its banks with depositors rushing to withdraw cash, according to a report. The Centre for Macroeconomic Analysis and Short-Term Forecasting (CMASF) warned the possibility of "depositor flight" has increased. It also warned in its forecast that "geoeconomic instability" could provoke a "panic reaction" among bank account holders, Newsweek reports. Under its early warning system, CMASF says a risk below 0.3 means there is a low probability of systemic liquidity risks.

A score between 0.3 and 0.5 suggests an average probability of depositor flight, but the risk has shot up from 0.27 in February, to 0.6 in April. The last time that level was reached was in March 2022 after Russian President Vladimir Putin launched Russia's full-scale invasion of Ukraine.

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At the time, Russians withdrew foreign currency totalling £7.38billion ($9.8bn), according to Reuters.

CMASF also warned Russia's economic woes look worse because of the impact its high interest rates have on lending and investment.

Russia's central bank held its key interest rate at 21% last month, pointing to the risks faced by the country's economy from US President Donald Trump's good trade tariffs.

High interest rates mean it costs more to borrow, which makes it more expensive for consumers and businesses to make purchases, slowing an economy.

The central bank warned a further decrease in global growth and oil prices threaten to push up inflation, which is forecast at 7.0-8.0%, well above Russia's 4.0% target.

Oil accounts for about a third of Russia's government revenues so a fall in prices would hit the Kremlin's budget hard.

In April, the price per barrel of Russia's key Urals blend fell to about $53 per barrel, way below the $69.7 per barrel average price the Kremlin's 2025 budget had priced in.

Meanwhile, Russia's economy ministry on Wednesday (April 30) said the country's gross domestic product (GDP) year on year grew 1.4% in March after expanding 0.7% in February, according to Reuters.

The ministry said GDP grew 1.7% in year-on-year terms compared with growth of 5.4% in January-March 2024. Russia's central bank predicts growth this year of 1-2% compared to the ministry's 2.5%.