Part I of the Russia and the World 2018 Report focuses upon forecasts of Russian foreign economic relations. The main attention is given to problems that are key to ensuring Russia’s stable economic development for the near (2018) and more distant future. It analyses and gives a forecast of the world (Russia, Europe, USA, Japan, India) economic trends in 2017-2018, including main Russian export markets. The Report is based on the decades long RAS IMEMO experience in forecast research. Part II presents the forecast of international relations for 2018, it analyzes main challenges for Russia and options to respond to them.

Russia’s relations with the world since 2014 are difficult. The existing contradictions resulted in the mutual introduction of sanctions, and also led to other geopolitical consequences, which had a significant impact on the Russian economy.

The Russian economy entered 2017 with positive expectations related to the revival of the global economy, improvement of the global markets and favourable dynamics of domestic economy indicators. After seven consecutive quarters of GDP decline there were signs of growth in the last quarter of 2016 and first quarter of 2017. The second quarter of 2017 demonstrated even greater growth. By the end of 2017, however, negative trends in the economy had been observed again, which reduced the GDP. Such a decline occurred against the backdrop of rising oil prices and global economic growth.

2018 will require large resources from Russia. This is due to Russia’s active participation in geopolitical events and related projects (for example, the construction of gas pipelines which allow for supplying gas directly to Europe), and major sports events such as the 2018 FIFA World Cup and Winter Universiade 2019 in Krasnoyarsk.

At the same time, the return on relevant projects raises significant issues. Nevertheless, positive trends have emerged in the Russian economy. Among them, the change in the policy of import substitution conducted in 2014-15, the policy of increasing non-resource exports, which can bring significant benefits. The dynamics of exports in 2017 shows a good result in this area. In general, in 2018, a slight increase in Russian GDP at the level of two percent is expected.