BOFIT Viikkokatsaus / BOFIT Weekly 2017/15

The latest forecasts of the CBR and economy ministry both see Russian GDP increasing by 1–2 % a year during 2017–2020. The forecasts assume the annual price of Urals crude to average between USD 40–50 a barrel. Economic recovery will be driven largely by domestic demand. Both household consumption and fixed investment are expected to grow at 2–3 % a year. Exports are expected to grow slowly and imports should rise faster than exports.

Both forecasts have the current account remaining in surplus, even if the surplus falls to USD 6–8 billion at the end of the forecast period. The financial account deficit (excluding currency reserves) is expected to persist in coming years, with deficit running in the range of USD 6–10 billion annually.

The forecast risk scenarios show GDP growth slowing to around 1 % at USD 35 a barrel and zero growth at the USD 25 level. The economy ministry has also prepared a scenario with growth accelerating to 3 % p.a. by 2020. Achieving this performance requires successful reforms that include improvements in the business environment, investment in education and increased competition in the economy.

The economy ministry is currently overseeing the drafting of Russia's long-term development strategy to the year 2035. A survey of 137 Russian experts conducted by the Institute of National Projects (INP) found that most respondents viewed as most desirable a growth model based on e.g. high-quality institutions and enrichment of human capital. Only a small percentage of respondents, however, viewed this model as the most likely outcome by 2035.