BOFIT Forecast for Russia 2015-2017 / 1

Abstract

Russian economic growth came almost to a standstill in 2014. Since the fall in the price of oil, the economy has begun to contract. According to our forecast, Russian GDP will contract by over 4% in 2015 if the oil price is over USD 55 a barrel. High uncertainty will cause a shrinkage in private investment, while private consumption will be cut particularly by rapid inflation. Imports will be weighed down by contracting domestic demand, the weakness of the rouble and a fall in export income. Imports are forecast to contract by a fifth. In 2016–2017, the price of oil will rise moderately, leading to a gradual flattening out in the contraction of the economy and imports, as Russia’s export receipts recover. There are substantial forecast risks relating to investment and imports, in particular. The foundations of economic growth will be eroded as investment declines and the support and protective measures taken to counter the recession smother reforms and competition further.