EDB economies to start economic growth in 2021

26 November 2020

The Eurasian Development Bank forecasts an increase in the aggregate GDP of its member countries by 3.2% in 2021 after a 3.8% decline in 2020. The easing of restrictions both globally and in the region’s countries as the fight against the pandemic progresses will be a key factor in reviving economic activity. Due to weak investment demand and partial preservation of social distancing, the full recovery of the region’s GDP to pre-crisis levels will take time. Kazakhstan is expected to achieve it in the second half of 2021; Russia, the Kyrgyz Republic, and Armenia in the first half of 2022; and Belarus in the beginning of 2023. Risks to the EDB’s projections remain heightened and skewed towards the downside.

Moscow, 26 November 2020

The Eurasian Development Bank (EDB) has published its Macroeconomic Forecasts for 2021. The countries in the Bank’s region of operations have been hit by widescale social and economic shocks this year due to the COVID-19 pandemic. The Bank forecasts its member states’ aggregated GDP to contract by 3.8% in 2020 after a 1.7% increase in the previous year. The economy of Armenia will experience a 6.4% decline; the Belarus economy 1.5%; the Kazakhstan economy 3.0%; the Kyrgyzstan economy 7.5%; and the Russian economy 4%. In Tajikistan, economic growth will slow to 4.5%, down from 7.5% in 2019.

State economic support measures for both the population and business have been instrumental in helping contain the output decline in the region. Kazakhstan and Russia, which have significant fiscal reserves compared with the region as a whole, have introduced the most ambitious anti-crisis packages (about 8.7% and 4.5% of GDP, respectively). We believe this will make up for about 2–3% of GDP losses in Kazakhstan and 1.3–2.3% in Russia this year. Armenia has deployed significant socio-economic support (about 3.7% of GDP): this will soften the decline in the country’s output by about 1.8–2.2% in 2020. In Belarus, Kyrgyzstan and Tajikistan, the volume of state support is relatively small (about 1.1%, 2.4% and 2.5% of GDP, respectively), on account of limited fiscal reserves among other reasons.

EDB analysts believe that the pace at which the Bank’s member economies will recover from this year’s turmoil will largely depend on the future developments around the pandemic. The EDB baseline scenario is based on the assumption that the COVID-19 pandemic will slow down, with restrictive measures being eased both globally and in the countries of the EDB operating region in the first half of 2021. External demand will gradually expand for the EDB member countries in 2021. The average price of Urals crude oil is expected to reach USD 49 per barrel after a price of USD 41 in 2020.

The review notes that the easing of the lockdown will boost the recovery of consumer and investment activity in the countries of the EDB operating region in 2021. Stronger external demand and higher commodity prices will support exports. Most of the Bank’s member countries are expected to maintain a soft monetary policy in the coming year. This will be also conducive to economic recovery.

Remittances will provide additional support to the economies of Armenia, Kyrgyzstan and Tajikistan in 2021. Due to the decline in the inflow of transfers of labor migrants in 2020, these countries have experienced an additional negative impact on household income and domestic demand. As economic activity recovers in the donor states, primarily in Russia, their volume will increase in the coming year. According to EDB calculations, remittances will account for about 0.5 p.p. of GDP growth in Armenia in 2021 and about 0.8–1 p.p. in Kyrgyzstan.

Real GDP growth rates of the EDB member countries



Source: EDB calculations

EDB analysts point to a number of factors that will constrain economic recovery in the region. The Bank’s baseline scenario suggests that sanitary restrictions will be eased gradually, and social distancing will remain part of daily life at least for the next year. Investment growth will be weak amid high uncertainty. Government support for the population and businesses through fiscal policies will be reduced.

The EDB projects growth in the economy of Armenia at 4.9% in 2021; that of Kazakhstan at 4.4%; that of Kyrgyzstan at 3.7%; that of Russia at 3.2%; and that of Tajikistan at 6.1%. Only Kazakhstan will experience a full GDP recovery in 2021 to the pre-crisis level of 4Q2019, as its decline in 2020 is estimated as relatively small. Armenia, Kyrgyzstan and Russia will reach their pre-crisis production level in the first half of 2022. The slow recovery is largely due to the high losses this year. In Belarus, GDP is expected to decrease by 0.1% in 2021 and its volume to reach the level of 4Q2019 only in the first half of 2023. Limited fiscal reserves, low investment demand and the unstable finances of the real sector will slow down the speed of recovery of the Belarusian economy.

The Macroeconomic Forecast indicates that rising oil prices and a recovery in investor interest in risk assets as the pandemic weakens will support the member countries’ currencies in 2021. High geopolitical risks will continue to exert pressure on the national currencies. In 2021, the average exchange rate of the dram to the US dollar is projected at around 492, the Belarusian rouble at 2.61, the tenge at 423.8, the som at 83.2, the Russian rouble at 74.5, and the somoni at 11.6.

The EDB projects inflation to slow down in the countries of the operating region in 2021. The growth rate of the consumer price index in Armenia will decline to 1.1%, from 1.2% in 2020, in Belarus, to 5.5% from 6.4%; in Kazakhstan, to 5.3% from 7.3%; in Kyrgyzstan, to 5.2% from 6.5%; in Russia, to 3.5% from 4.2%; and in Tajikistan, to 5.3% from 8.5%. Moderate domestic demand will continue to limit the growth of consumer prices in the EDB member countries. The pressure on inflation caused by the national currency exchange rates and the increase in world food prices that has occurred this year is expected to gradually decrease.

Risks to the EDB baseline scenario remain heightened and skewed towards the downside. If the rapid increase in infections is not curbed promptly and the mass distribution of vaccines is delayed, the loss of economic growth will be much more severe than assumed in the base case. The EDB calculates that, if the global economy recovers at a slower pace (twice as slow as in the baseline projection), next year’s oil price will be around US $41 per barrel, which is almost 16% below the level assumed in the baseline scenario. In such case, Russia’s GDP will lose about 0.8 p.p. of growth in 2021, and Kazakhstan will lose about 0.9 p.p.

“The history of economic crises shows that people always find ways to solve complex problems. The recession will be followed by a period of recovery. We expect most economies of the EDB operating region to return to growth in 2021. However, the uncertainty and risks are very high in the current environment. In the wake of high uncertainty, it is most important for the Bank’s member countries to maintain government support measures for the economy, especially for small and medium-sized businesses and employment, thus curbing the negative social and economic consequences of the pandemic to the extent possible. Achieving a stable growth trajectory while maintaining macroeconomic and debt stability is of particular relevance in the coming year. Even under a favorable scenario, an increase in the long-term economic growth rate of countries in the Bank’s operating region will require government measures aimed at overcoming structural constraints,” comments Evgeny Vinokurov, EDB and EFSD Chief Economist.

Forecasts of key macroeconomic indicators of the EDB member countries (base case)




(at end of year)

Exchange rate to U.S. Dollar

(the year’s average)

IBL rate

(the year’s average)































































Note: GDP and inflation are in % change YoY; the exchange rate against the U.S. dollar is in units of the national currency for USD 1; IBL is in % (or the refinancing rate for Tajikistan).

Source: EDB calculations

The Macroeconomic Forecasts for 2021 is available online.

The review will be represented and disseminated at the First Eurasian Congress to be hosted by the EDB on 4 December 2020.

Other reports and publications by the EDB and the EFSD are available in the Research section on the Bank’s website and the Research and Publications section on the Fund’s website.

Additional Information:

The Eurasian Development Bank (EDB) is an international financial institution promoting integration and development in its member countries – Armenia, Belarus, Kazakhstan, the Kyrgyz Republic, Russia, and Tajikistan. The EDB's charter capital totals US $7 billion. The Bank was established in January 2006 by Russia and Kazakhstan and is headquartered in Almaty. Transport infrastructure, energy, chemical, mining, and mechanical engineering projects with a high integration effect account for the main part of the EDB’s portfolio.

The Eurasian Fund for Stabilization and Development (EFSD) amounting to US$8.513 billion was formed on 9 June 2009 by the governments of the same six countries. The EFSD assists its member states in overcoming the consequences of the global financial crisis, ensuring their economic and financial stability, and fostering integration in the region. The EFSD member countries signed the Fund Management Agreement with Eurasian Development Bank giving it the role of the EFSD Resources Manager.

The EDB Media Centre:

Alexander Savelyev +7 (985) 765 23 59 (Moscow)

Azima Sapargaliyeva +7 (777) 750 00 08 (Almaty)

Sergey Gorbachev +7 (916) 727 22 00 (Moscow)




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