Bank of Finland BOFIT: Russia's GDP improved by 6.4% in 2007.

According to the forecast issued by the Bank of Finland's Institute for Economies in Transition (BOFIT) concerning the Russian economy (I/2007), Russia's total output growth is estimated to increase 6.4% over the coming year (in comparison to an increase of 6.7% last year). The Russian economy is expected to continue growing at close to 6% for the following two years, 2008–2009. Economic growth is particularly promoted by the rapid increase in consumption and investment levels, high oil prices and Russia's stable fiscal policy. The rapidly growing economy and the strengthening rouble are also reflected in the robust increase in exports which, in terms of volume, is expected to grow three times faster than total output in the next few years.

As the Russian economy is still highly reliant on the energy sector, the most significant risk posed on economic growth would be plummeting oil prices on the world market. This would slow growth, with the result that the current account surplus would be absorbed fairly swiftly. However, the sound situation of Russia's central government finances provides the opportunity to soften the potential blow of any drop in oil prices through an increase in public consumption and investments. An abrupt change in direction of the fiscal policy could admittedly disrupt current stability and growth. The political uncertainty brought on by the presidential elections due in 2008 could also pose a threat to the continuing economic growth. In the long term, the challenges that Russia's economy faces include negative population development and the economy's high dependency on natural resources, although none of these are expected to affect economic growth in the next few years.

BOFIT's Russian forecast has been published biannually since the beginning of 2006. A full version of the forecast can be found on BOFIT's web page http://www.bof.fi/bofit.

Table: Forecast for the Russian economy, 2007–2009