The latest forecast for Russia from the Bank of Finland’s Institute for Economies in Transition (BOFIT) sees the GDP contracting about 4 % in 2015, if the average oil price is slightly below $55 a barrel. Uncertainty restrains investment, and high inflation has hurt consumption. Oil exports increase, however. Imports fall by about 25 % from 2014. In 2016–2017, the oil price will rise moderately, while the collapse of the oil price in 2014 will weigh on the economy still in 2016. The economy and imports should contract slightly in 2016 and then begin a feeble recovery. Growth will remain slow as investment has been low and systemic deficiencies have not been addressed. Uncertainty will persist due e.g. to tensions in eastern Ukraine. The government has few options for stimulus. The forecast is subject to large risks especially with respect to investment and imports.
Chinese economic growth continues to slow in an expected way. BOFIT forecasts GDP growth to average around 7 % p.a. in 2015, and then fall to around 6 % p.a. in 2016 and 2017. China faces the challenge of creating new engines of growth and managing its existing problems. This calls for determined reforms that inevitably will also bring about disturbances in the economy. Given decelerating growth and rising indebtedness, the risk that the Chinese economy underperforms this forecast is rising.
Both forecasts are available here.
For further information:
Vesa Korhonen, senior economist, +358 10 831 2834 / vesa.korhonen(at)bof.fi (Russia)
Jouko Rautava, adviser, +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).