We expect Russian GDP to continue reviving, increasing by nearly 2 % this year. If the oil price remains near its current levels, growth will slow to around 1.5 % p.a. in 2019 and 2020. While growth in Russia's imports remains fairly brisk, we see the recovery in imports this year slowing substantially from last year's strong rebound and a bit further thereafter. Growth of the economy will remain relatively slow as proper reforms that would support generation of income and growth are not in sight.
The pace of China's economic growth accelerated slightly last year, with official figures showing GDP growth of 6.9 % p.a. Even if the economic cycle appears on the upswing, growth is undergirded by the government's heavy-handed stimulus policies. Since the Communist Party's National Congress last autumn, the policy stance has tightened and the role of the party has been amplified. As a result, we have slightly boosted our GDP forecast for this year, putting it on par with China's official GDP growth target of "about 6.5 %." Going forward, high growth fuelled by debt will become unsustainable. China's debt-to-GDP ratio is already high and will continue to rise in the forecast period. Thus, we expect growth to slow to a more sustainable level of around 5 % by 2020. Several sources of uncertainty from both domestic and international markets cloud China's economic outlook. Downside risks have increased from our previous forecast.
For further information
Russia: Senior Economist Vesa Korhonen
tel. +358 9 183 3440 / vesa.korhonen(at)bof.fi
China: Senior Economist Riikka Nuutilainen
tel. +358 9 183 2518 / riikka.nuutilainen(at)bof.fi
Russia and China: BOFIT Head Iikka Korhonen
tel. +358 9 183 2272 / iikka.korhonen(at)bof.fi