BOFIT Forecast for Russia 2013-2015 / 2

The slowdown in Russian economic growth to around 1.5% p.a. in the first half was significantly sharper than predicted. The drop largely reflects cuts in investment by state-owned enterprises and the public sector. We expect the Russian economy to pick up this year as recovery in the global economy gets underway. GDP growth for all of 2013 should reach nearly 2%. If the oil price declines slightly during the forecast period as we assume, it will weigh on Russian economic growth. Nevertheless, GDP growth should slightly exceed 3% p.a. in 2014 and 2015 as the recovery of world trade gives a small lift to Russian exports. Although household incomes will not rise as fast as earlier, lower inflation will slightly increase household purchasing power. Investment should return to growth as capacity constraints are not far. Growth in public sector spending will slow. Growth in Russian imports should pick up slightly to around 5% p.a.