​The Bank of Finland Institute for Economies in Transition (BOFIT) has released its latest forecasts for the Russian and Chinese economies.

Russia: After shrinking 3.7 % last year, BOFIT projects Russian GDP contracting 3 % this year if the oil price averages slightly above $40 a barrel (about 60 % below the average price in 2014). Russian imports slumped by 30 % in 2014–2015, and imports are expected to fall another 10 % this year. With rather high inflation eating away at purchasing power, domestic demand should dwindle further this year, including a substantial reduction in real government spending. While a gradual rise in oil prices will bring economic respite and revive imports in 2018, economic growth will remain subdued due to uncertainties and Russia’s poor business environment. The biggest risks in the forecast involve oil prices and changes in imports.

China: Economic growth in China continued to slow in 2015, with annual GDP growth coming in at slightly below 7 %. Even with the negative market reactions to lower growth, there is little change in the long-term outlook. The modest slowing trend in growth will continue and China will move ahead with structural adjustments to its economy. BOFIT expects the Chinese economy to grow at around 6 % a year in 2016 and 2017. In 2018, growth will slow to around 5 %. As China’s economy opens up to the world, it faces new risks that require more transparent policy responses. China’s high debt-to-GDP ratio makes it increasingly susceptible to severe economic disturbances.

Both forecasts are available here.

For further information:

Vesa Korhonen, senior economist, +358 10 831 2275 / vesa.korhonen(at)bof.fi (Russia)
Riikka Nuutilainen, economist, +358 10 831 2518 / riikka.nuutilainen(at)bof.fi (China)
Iikka Korhonen, BOFIT head, +358 10 831 2272 / iikka.korhonen(at)bof.fi (Russia and China).