Country Forecast Russia April 2018 Updater

Country Forecast Russia April 2018 Updater

  • April 2018 •
  • Report ID: 472432 •
  • Format: PDF


  • Vladimir Putin was re-elected as president for a fourth term in March 2018, securing a record 77% of the vote on a turnout of 67%. Mr Putin's re-election was expected, given his approval ratings of about 80% and the absence of credible opposition candidates. Formal political opposition is marginal and will remain so over The Economist Intelligence Unit's forecast period (2018-22).
  • The government is unlikely to implement disruptive market reforms in the forecast period. Chinese companies are likely to take a bigger role in the economy, especially in the far eastern part of the country. However, their access to strategic sectors (such as oil and gas) will remain controlled.
  • An improvement in US-Russia relations is unlikely in 2018-19 given the intense scrutiny of Russia's alleged interference in the 2016 US presidential election campaign and new sanctions imposed by the US against Russia in 2017-18.
  • We do not expect the Minsk II agreement to lead to a comprehensive settlement of the conflict in eastern Ukraine in our forecast period, and certainly not before the 2019 Ukrainian parliamentary and presidential elections.
  • We expect US and EU sectoral sanctions on the Russian defence, energy and financial sectors to remain in place in 2018-22. Russian counter-sanctions on Western food imports will also remain in place.
  • After it contracted in 2016 the economy grew by 1.5% in 2017, supported by higher global oil prices and a recovery in household consumption. We forecast growth of 1.7% in 2018, mainly driven by household consumption.
  • Despite pressure to maintain welfare spending, the government will cut public expenditure as a share of GDP in 2018-22. The budget deficit will narrow to 0.4% of GDP by 2022 as stable oil prices facilitate fiscal consolidation.
  • The current account is structurally in surplus owing to oil and gas exports. We estimate that it equalled 2.6% of GDP in 2017, as global oil prices increased, but a stronger rouble against the US dollar weighed on export revenue.
  • The medium-term growth outlook will be constrained by structural weak-nesses, including a lack of competition, high state involvement in the economy, low investment levels, international sanctions, an ageing and declining workforce, and a weak rule of law.






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