A panel of economists from BOFIT, the Bank of Finland’s Institute for Economies in Transition, will present multiple assessments of the current state of the Russian economy on Monday (May 27). Presentations are in Finnish.
The Russian economy is growing, albeit relatively slowly. The trend for fixed investment continues to be weak, and growth potential in the years ahead seem unlikely to exceed the current pace of economic growth. The issue of growth potential is organically linked to the issue of Russia’s relatively poor environment for doing business. While Russia has made large strides on many fronts, the required structural overhaul needed ease conducting business – for both domestic and international companies – has yet to occur.
Even so, Russia’s public sector finances are in excellent condition thanks to high world oil prices. This year’s public sector surplus could reach as much as 3 % of GDP. Revenues are sufficient to cover topping up sovereign wealth fund with money still left over for further improvements in healthcare and education. Public sector debt is nearly non-existent.
Earnings from oil and other energy product exports go to funding public sector budgets and pay for imports. China’s economic ties with Russia have strengthened in recent years, and in this respect Russia’s relationship with China is quite similar to that of many other countries. China’s contribution to the global economy continues to increase, and this is reflected in the export demand of all countries. As Russia is geographically situated between China and the western parts of the Eurasian continent, the country is positioned to take advantage of economic possibilities in several arenas, including land and sea transport. Development in these areas will help with Russia’s integration into the global economy. On the other hand, Western sanctions and Russian countersanctions are hurting Russia’s economic prospects. While the direct economic impacts of sanctions have been limited up to this point, they have limited Russia’s access to international credit markets.
The event, “Russia’s role in the global economy,” will run for about three hours starting at 9 AM (UTC+2). It will be broadcast live on the Bank of Finland’s YouTube channel and posted for later viewing.
For further information:
Iikka Korhonen, BOFIT head, +358 9 183 2272, iikka.korhonen(at)bof.fi