With the coronavirus pandemic and drop in global commodity prices proving more severe than foreseen in the baseline of our March forecast, we have substantially lowered our outlook for Russian GDP growth. The Russian economy is now expected to contract by 4 % this year and return to moderate growth next year. Russia’s economic prospects remain uncertain as the on-going pandemic and commodity markets could see turns for the worse.
China’s economy has bounced back from lockdown in the first months of this year, as the country was able to lift restrictions to prevent the spread of the coronavirus, implement stimulus measures and demand for pandemic-related products boosted industrial output. We expect China’s GDP to grow slightly this year. While the rate of recovery has levelled off, the 2021 growth figure will be impressive given the weak comparison number for this year. The recovery of the economy has been uneven, with many existing structural problems made worse. The largest risks of the forecast are associated with a new broad-based wave of coronavirus infections and financial sector problems from a reacceleration in indebtedness while firms in many branches are finding it harder to service debt. Uncertainty is heightened by deteriorating foreign relations, especially with the United States.
For further information
Russia: Senior Economist Heli Simola
tel. +358 9 183 2263 / heli.simola(at)bof.fi
China: Senior Economist Juuso Kaaresvirta
tel. +358 9 183 2107 / juuso.kaaresvirta(at)bof.fi
Russia and China: BOFIT Head Iikka Korhonen
tel. +358 9 183 2272 / iikka.korhonen(at)bof.fi