Country Forecast Russia January 2018 Updater

Country Forecast Russia January 2018 Updater

  • January 2018 •
  • Report ID: 362266 •
  • Format: PDF


  • The Economist Intelligence Unit expects Vladimir Putin, the incumbent, to win March 2018 presidential election with a large majority in the first round. The principal cause for concern for the authorities will be to maintain a high turnout in the absence of credible alternative candidates. Formal political opposition is and will remain marginal.
  • The government is unlikely to implement disruptive market reforms before the presidential election. Chinese companies are likely to take a bigger role in the economy in the forecast period (2018-22), especially in the far eastern part of the country. However, their access to strategic sectors will be tightly controlled.
  • A rapprochement between the US and Russia is unlikely in 2018-19 given the intense scrutiny of Russia's alleged interference in the 2016 US presidential election campaign and new US sanctions against Russia.
  • We do not expect the Minsk II deal to lead to a comprehensive settlement of the conflict in eastern Ukraine. Ukraine will not regain full control of its border with Russia in the forecast period.
  • We expect US and EU sectoral sanctions on the Russian defence, energy and financial sectors to remain in place in 2018-22. Russian sanctions on Western food imports will also remain in place over the forecast period.
  • The economy contracted by 0.2% in 2016. We estimate growth of 1.8% in 2017, supported by higher oil prices and a recovery in household consumption.
  • Despite pressure to maintain welfare spending, the government will cut public expenditure in 2017-19 to contain the budget deficit. The deficit will narrow to less than 1% of GDP by 2021, from 3.4% of GDP in 2016.
  • The current account is structurally in surplus owing to oil and gas exports. The current-account surplus amounted to 2% of GDP in 2016. We estimate it reached 2.7% of GDP in 2017, as higher oil prices boosted export revenue.
  • The medium-term growth outlook will be constrained by structural weaknesses including a lack of competition, high state involvement in the economy, an ageing and declining workforce, and weak rule of law. We forecast average annual GDP growth of 1.7% per year in 2018-22.






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