The latest forecast for Russia from the Bank of Finland’s Institute for Economies in Transition (BOFIT) sees growth of the Russian economy, which has already experienced a severe slowdown, will slow further this year due to the effects of the Crimea situation. In 2015 and 2016, the economy should recover and grow one and a half per cent p.a. After a slight dip this year, imports should grow a couple of per cent p.a. The Russian economy could perform well below our forecast if downside risks materialise. The leadership may respond to weak growth with increased state spending and boosting credit via the banking system. If Russia does not move ahead with necessary systemic reforms faster and on a broader basis than in recent years, Russian economic growth is expected to stay around a 2 % p.a. long-term trend.
Our forecast for China notes that economic growth in China has gradually slowed in recent years, falling below 8 % p.a. over the past two years. The slowdown was awaited and we expect further slowing as China shifts to a more sustainable growth model. We forecast economic growth to hover around 7 % this year and next year, and then slow to about 6 % in 2016. Rising debt and worrisome financial market trends, however, could have destabilising effects. Progress in market reforms alters the rules of the game, so participants in the Chinese economy need to be aware of the new risk landscape.
Both forecasts can also be found here.
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 and China)