The bottom promises to be less deep – Newspaper Kommersant No. 140 (7341) of 08/04/2022

Despite the deterioration in estimates of overall global economic growth this year, macroeconomic forecasts for the countries of the CIS+ region are improving. The decline in GDP, according to analysts surveyed by Focus Economics, is still expected in Russia, Ukraine, Belarus and Moldova. At the same time, the assessment of the contraction of the Russian economy this year has been reduced from 9.3% to 8.1%, the Ukrainian one – from minus 36.3% to minus 34.6%. The key risk for the economies of the region remains the intensification of the conflict between the Russian Federation and Ukraine, analysts say.

The forecast for the state of the economy in the CIS+ countries continues to improve – now, according to the consensus estimate of economists surveyed by Focus Economics, the decline in this region in 2022 may be 7.2% instead of the 8.3% expected a month ago. For purposes of analysis, the CIS+ region includes not only countries that are members of the Commonwealth, but also Ukraine, Georgia, and Turkmenistan. Note that analysts’ forecasts for the US, the euro area, Japan and China have been lowered, which affected the global growth estimate. For this year it is reduced by 0.1 percentage points (p.p.), to 3%, for the next – by 0.2 p.p., to 2.7%.

“The consequences of the conflict in Ukraine affect the economies of the region through rising inflation, weakening external demand and investment inflows, and the intensification of the conflict remains a key risk,” Focus Economics says. Price growth on average in the region this year will accelerate to 15.7% from 7.4% last year. The inflation forecast has been improved – from 16.4% expected in July, inflation is expected to slow down to 9.4% next year. For comparison, the global forecast assumes prices will increase by 7.9% this year and 4.8% next year.

For the Russian economy, the recession forecast has been reduced from 9.3% to 8.1%. Next year, however, a more pronounced decline in GDP is expected – by 2.5% instead of 2.1%. Inflation growth in the Russian Federation this year may reach 16%, next year – 9% (a month ago 17% and 9.7% were expected). “In the second quarter, the fall in GDP probably intensified against the backdrop of sanctions, as well as a large decline in domestic consumption (for its dynamics, see this page.— “b”). The external sector, meanwhile, is softening the pace of economic contraction, but the reduction in natural gas supplies to Europe, as well as the sale of oil to Asian countries at a discount, will reduce export earnings, and the lack of necessary imports will affect industrial production,” experts expect.

The biggest downturn among countries in the region is still projected for the Ukrainian economy, which is facing a record drop in exports and the consequences of infrastructure destruction. However, in this case, the estimate has also been improved – from minus 36.3% to minus 34.6% (in 2023 – an increase of 8.7% instead of 12%). In Belarus, the decline will be 6.3% this year, 0.6% next year and will be the sharpest in the last 27 years. The country’s economy is also threatened by the risks of additional sanctions. GDP contraction is also expected in Moldova – by minus 0.4% with an increase of 2.6% next year.

The rest of the CIS+ countries will maintain positive growth rates. The least pronounced decrease in the indicator compared to last year will be in Azerbaijan, where growth is expected by 4.6% (support for the economy comes from higher energy prices) and in Kazakhstan – plus 3.3% (in this country, the tightening of monetary policy has a negative impact to fight inflation, as well as the weakening of external demand from the main countries-trading partners – Russia, China and the EU Significantly improved the assessment of Armenia for this year – from 1.9% to 3.7% (the next – lowered from 4% Note that the EDB predicts even higher GDP growth in this country (up to 7%) against the backdrop of an influx of tourists and an increase in demand from non-residents – the growth of the services and trade sectors in the first half of the year amounted to 26.9% and 10 .7% respectively.

Tatyana Edovina