​The latest forecast for Russia from the Bank of Finland’s Institute for Economies in Transition (BOFIT) sees GDP growth rising at less than 3.5 % a year in 2013 and 2014. Growth will slow further in 2015. The forecast assumptions include a gradual decline in the oil price. On the other hand, the global economy and trade should gradually recover. The pace of Russian import growth should be substantially lower than in recent post-crisis years, which saw soaring import rebound from the deep 2009 recession. The forecast is subject to upside and downside risks. For example, private consumption would exceed the forecast if the government’s current policy of hiking wages in select parts of the public sector spread to the rest of the public sector.

The forecast for China suggests that China’s investment-driven growth model, which is heavily dependent on natural resource inputs, appears to have run its course. This means that future growth will increasingly have to come from domestic consumer demand. GDP growth will still be around 8 % this year, but as China begins to digest the needed structural changes, growth should slow to around 7 % a year in 2014 and 2015. This forecast requires that China’s newly minted political leadership demonstrate sincerity in their commitment to continue implementation of needed structural reforms as set out by the previous administration. Along with structural change in the real economy, liberalisation of China’s financial markets will inevitably generate uncertainty over the three-year forecast period.

Both forecasts are posted at www.bof.fi/bofit.

For further information:
Vesa Korhonen, Senior economist, +358 10 831 2834 / vesa.korhonen(at)bof.fi (Russia)
Jouko Rautava, Senior economist, +358 10 831 2280 / jouko.rautava(at)bof.fi (China)
Iikka Korhonen, BOFIT head,  +358 10 831 2272 / iikka.korhonen(at)bof.fi (Russia/China)