BOFIT Viikkokatsaus / BOFIT Weekly 2019/01

Major forecasts for Russian GDP growth this year run around 1.5 % p.a. The low pace of growth roughly matches that of realised growth during 2017 and 2018.

The forecasts differ in their assumptions about changes in global oil prices from last year (in the first eleven months of 2018, the Brent oil price averaged around 72 dollars a barrel). Several forecasts note diminished sensitivity of Russian GDP growth to oil prices since the adoption of the new fiscal rule and the floating of the ruble’s exchange rate. The sensitivity to oil prices remains, however. The fiscal rule limits budget spending mainly through use of a low oil price assumption.

The recovery in household spending is expected to slow with the hike in value-added taxes at the start of this year. Growth is expected to be around 1.5 % this year and just over 2 % in 2020. Fixed investment growth is expected to recover to around 2−2.5 % in 2019 and then accelerate quickly in 2020 on increased government investment. Growth in the volume of Russian exports, which has been brisk in recent years, is expected to slow in coming years to around 2 %. The revival in Russian imports is expected to continue at a rate of a couple of per cent each year.

Russian GDP growth forecasts, 2019−2020