The EBRD has published a forecast for the region of its presence

The countries of Central Asia will demonstrate sustainable growth in both 2023 and 2024, predicts the European Bank for Reconstruction and Development (EBRD). Experts attribute this to the consequences of the Russian military operation in Ukraine: from the relocation of Russian business to Central Asian countries to the restructuring of Russian trade due to sanctions. In general, for the region where the EBRD operates, the forecast is less optimistic: economic growth rates in 2023 are expected to slow to 2.4% from 3.3% in 2022. Some acceleration – up to 3.2% – is expected in 2024 after inflation pressures ease.

The European Bank for Reconstruction and Development presented an economic forecast for the region of its presence for 2023–2024. He is most optimistic for the countries of Central Asia. It is expected that thanks to increased cooperation (primarily intermediary trade) with the Russian Federation and the relocation of Russian business, GDP growth in this region will be 5.7% in 2023 and 5.9% in 2024.

According to EBRD estimates, the post-pandemic expansion of trade with China is now contributing to the growth of the economies of Central Asia – and the slowdown in the economic growth of this country remains one of the significant risk factors for the region. Let us remind you that China is now the main trading partner of Kazakhstan (see “Kommersant” dated September 5). At the end of the first half of 2023, trade turnover with it amounted to $13.6 billion (20.5% higher than last year’s value for the same period). Among other risks for the economy of Kazakhstan, the EBRD names a decline in oil prices and problems with the operation of the Caspian Pipeline Consortium (CPC) terminal on the Black Sea (about Astana’s attempts to find alternatives to the CPC see “Kommersant” dated June 6). For Kazakhstan, the EBRD predicts growth of 5% in both 2023 and 2024, for Kyrgyzstan – by 4.6% and 7%, for Mongolia – by 7.2% and 7.5%, for Uzbekistan – by 6 .5% this and next year.

Individual countries of the Caucasus will also demonstrate high growth rates in 2023. Thus, the economy of Armenia, according to EBRD estimates, will grow by 6.5%, Georgia – by 6%.

This is also explained by the consequences of the Russian military operation in Ukraine – “economic migration” from the Russian Federation and the influx of cross-border remittances. However, it is assumed that the “favorable effects”, which actually allow analysts to consider these countries as conditional beneficiaries of Russia’s actions, may exhaust themselves as early as next year: the authors of the report expect a slowdown in economic growth to 4.5% in 2024 and in Armenia, and in Georgia.

In general, in the EBRD’s region of operations (in addition to Central Asia, these include European countries, Turkey, part of the Middle East and North Africa), analysts expect economic growth to slow from 3.3% in 2022 to 2.4% in 2023.

Among the reasons is the attempt of European countries to reduce dependence on gas supplies from the Russian Federation, which resulted in a significant reduction in industrial production in “gas-intensive” industries (we are talking about the production of ferrous and non-ferrous metals, chemicals, and construction materials). Although changes in the structure of industrial production led to a contraction in European business activity (see “Kommersant” dated August 31), so far they have not seriously affected the stability of the labor market, the EBRD reminds. In many countries, according to analysts, high rates of wage growth were recorded.

The expected increase in gas prices in the winter may, as analysts believe, accelerate inflation, which has slowed over the past year. Economic growth in the EBRD region is expected to accelerate slightly only after inflation pressures ease in 2024, reaching 3.2%.

Kristina Borovikova