Russian GDP has so far this year contracted less than one per cent from a year ago. The decline has been constrained by a notable recovery in oil prices and a large fall in imports caused by a weak ruble. We now expect Russian GDP to shrink by 1 % for 2016 overall, with imports falling about 7 %. The oil price is expected to creep up from below $45 a barrel this year to just under $55 a barrel in 2018. While GDP recovers gradually in 2017, growth will be slow due e.g. to inadequate fixed investment and the fiscal challenges facing government at all levels. As the economy recovers and Russian export earnings increase, imports will grow moderately. The main forecast risks continuously involve oil prices, imports and government finances.
Growth of the Chinese economy this year has slightly exceeded our expectations, largely due to the government’s stimulus policies. We now expect GDP to grow about 6.5 % p.a. this year. However, China’s growth outlook has not changed. We project growth to slow to 6 % in 2017 and 5 % in 2018, and consider the slowdown as a natural aspect of the China’s economic development. As structural adjustments proceed, the role of consumer demand and services in the economy will become more pronounced. Concerns over economic development have increased, and the possibility of a rapid deceleration in growth during the forecast period cannot be ruled out.
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, Adviser, +358 10 831 2280 / jouko.rautava(at)bof.fi (China)
Iikka Korhonen, BOFIT Head, +358 10 831 2272 / iikka.korhonen(at)bof.fi (Russia and China).