BOFIT Forecast for Russia 2019-2021 / 2

Abstract

Russia’s high growth last year was spurred by transient factors, and growth is expected to subside to lower levels this year. The outlook for global economic growth darkened considerably over the summer and is reflected in the performance of the Russian economy. Growth slowed much more in the first half of this year than we anticipated in our April forecast. For all of 2019, we now expect growth of around 1 % p.a. Otherwise, our outlook for the Russian economy in coming years is largely unchanged from earlier forecasts. Stagnating real incomes and decelerating growth rates in household borrowing should supress private consumption growth. Government policies are unlikely to support private investments. In other words, growth in the years ahead will come largely from public consumption and net exports. Investments stipulated by government’s national projects will lift economic growth slightly, especially in 2020. Growth slows towards 1.5 % p.a. at the end of the forecast period.