After two years of decline, we see Russian GDP growth, supported by higher oil prices, rising to 1.5 % this year. Growth is led by private domestic demand which also stimulates imports. Russian growth should remain sluggish in coming years as the economy is already operating near full capacity and needed structural reforms are still nowhere in sight.
Official Chinese figures show that GDP growth was last year 6.7 % p.a., which is slightly less than in 2015. The trend largely follows our forecast from last September. As before, GDP growth is expected to slow to around 6 % this year and around 5 % in 2018 and 2019. The basic outlook for the forecast period is quite positive as growth should remain robust and the slowdown appears under control. This requires, however, improved discipline with regards to rising debt and more determined implementation of reform policies than we observe now. The government’s strict adherence to a 6.5 % GDP growth target distorts economic policy and encourages data manipulation to an extent that it may already be an issue.
For further information
Russia: Heli Simola, Senior Economist
Tel. +358 10 831 2263 / heli.simola(at)bof.fi
China: Jouko Rautava, Adviser
Tel. +358 10 831 2280 / jouko.rautava(at)bof.fi
Russia and China: Iikka Korhonen, BOFIT Head
Tel. +358 10 831 2272 / iikka.korhonen(at)bof.fi