The Bank of Finland Institute for Economies in Transition (BOFIT) released today its semi-annual forecasts for the Russian and Chinese economies. The spring 2020 forecasts cover the period 2020–2022.
We have reduced substantially our forecast for Russian GDP growth to -1 % for this year due to notably lower commodity prices and a weakened outlook for the global economy. We expect Russian GDP to return to moderate growth next year. Higher government spending supports the economy. In the current situation risks are exceptionally large and Russia’s economic development can turn out considerably weaker if the global uncertainty caused by the corona pandemic is prolonged. Given the unlikely prospects for major structural economic reforms, Russia’s longer-term growth potential remains moderate.
China’s economic growth was already slowing before the outbreak of the coronavirus epidemic in the latter half of January. The epidemic and strict measures imposed by the government to rein in the accelerating infection rate brought China’s economy to a stand-still. While we are now witnessing a recovery of the economy that is supported by stimulus measures, it is clear that some lost production will never be made up. Accordingly, our forecasts have been revised downwards. We now estimate that China’s real GDP will turn negative this year, but as the situation normalizes, growth is likely to be impressive next year before falling back to the earlier trend at the end of the forecast period in 2022. Downside risks have dramatically increased due to the unpredictable fallout from the coronavirus pandemic.
BOFIT forecasts are available online: https://www.bofit.fi/en/monitoring/forecasts-for-Russia-and-China
For further information:
Heli Simola, senior economist, +358 9 183 2263 / heli.simola(at)bof.fi (Russia)
Jouko Rautava, adviser, +358 9 183 2280 / jouko.rautava(at)bof.fi (China)
Iikka Korhonen, BOFIT head, +358 9 183 2272 / iikka.korhonen(at)bof.fi (Russia and China).