Russian economic growth gathered steam in 2018. Rising oil prices and ruble depreciation combined to boost budget revenues and net export earnings. Russia’s hosting of the 2018 FIFA World Cup international football tournament boosted demand in the tourism and restaurant industries. Large investment projects in the natural gas industry also advanced faster than expected. The contraction of the corporate credit stock ended, while growth of the household credit stock accelerated appreciably – a shift that was reflected in improved profitability of the banking sector. Rosstat’s first estimate of 2.3 % GDP growth last year exceeded the high end of most forecasts.

Lower economic growth should return this year, however. The hike in value-added taxes and a mild pick-up in the inflation rate are impeding growth in household consumption. Moreover, there are no signs of an across-the-board recovery in fixed investment, meaning net exports will continue to be an important growth driver in 2019. The launch of massive state investment projects in 2020 and 2021 should slightly boost the pace of economic growth, particularly in 2020. BOFIT expects Russian economic growth to settle in at around 1.5 % annually in coming years.

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China’s economic growth, which witnessed a slowdown last year, continued to deteriorate in the early months of this year. Although the government has responded with measures to support growth, an already lax fiscal stance and extremely high debt-to-GDP ratio highlight the limits to debt-driven stimulus policies. Adding to the mix, the trade war between China and the United States has exacerbated economic uncertainty. Business-cycle weakness is accompanied by structural factors that depress the growth such as demographic shifts and the government’s failure to move ahead with economic reforms. While China’s economic growth is expected to continue to slow during 2019–2021, it will still outpace growth of the global economy. The risk of a sudden slump of growth has increased significantly. Unreliable official GDP data complicate assessment of China’s true economic conditions.

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For further information

Russia: Senior Adviser Laura Solanko
tel. +358 9 183 2291 / laura.solanko(at)

China: Senior Economist Juuso Kaaresvirta
tel. +358 9 183 2107 / juuso.kaaresvirta(at)

Russia and China: BOFIT Head Iikka Korhonen
tel. +358 9 183 2272 / iikka.korhonen(at)