​The latest forecast for Russia from the Bank of Finland’s Institute for Economies in Transition (BOFIT) sees the Russian economy recovering from a sharp first-half slowdown as the global economy picks up. GDP growth should approach 2 % this year. We assume the oil price will decline slightly over the forecast period, thereby restraining economic growth somewhat. Nevertheless, GDP should grow at over 3 % a year in 2014 and 2015 on strengthening international demand, increased domestic consumption and a recovery in fixed capital investment. Russian import growth should revive to around 5 % a year. Russia’s economic growth will be weaker than forecasted if the global economic recovery is delayed, the oil price falls, growth in state spending slows more than scheduled, or uncertainty around demand and the business environment limits investment. Russia’s current high employment rate could also constrain economic growth.

Despite unexpectedly low growth in the first half of 2013, our latest forecast for China still sees the overall economic trend consistent with our earlier view that China is gradually moving to a lower-growth paradigm. We see GDP growth at about 7.5 % this year and slowing to around 7 % in 2014 and 2015. China’s lower growth in the out years reflects structural adjustment to a more consumption-driven model. The current growth rate is still high enough and does not call for any large-scale monetary and fiscal stimulus. Moreover, the leeway of economic policies is constrained by high debt levels of local administrations and many businesses. As regards economic reforms, China’s new leaders seem to be delivering on their promises.

The forecasts can be found here.

For further information:
Vesa Korhonen, Senior economist, +358 10 831 2834 / vesa.korhonen(at)bof.fi (Russia)
Jouko Rautava, Senior economist, +358 10 831 2280 / jouko.rautava(at)bof.fi (China)
Iikka Korhonen, BOFIT head,  +358 10 831 2272 / iikka.korhonen(at)bof.fi (Russia/China)