EDB researchers state that despite a 1.6% growth in GDP of the CIS countries in Q3 2013 the region shows stronger economic activity
Almaty, 25 December 2013. In Q3 2013, with the improvements in the global economic situation, the CIS region also demonstrated stronger economic position. This conclusion is suggested in the new issue of The CIS Macromonitor published by Eurasian Development Bank’s (EDB) Research Department. The rise in the CIS countries’ aggregate GDP was 1.6% year-on-year. The best performance was shown by retailing, construction and the services sector. The decline in industrial production and investment activities seems to have reached its bottom — now the increase in the physical volumes of the most important exports should foster the recovery of investment and production activities in the region.
Azerbaijan has stepped up its economic growth: in January-September the country’s GDP went up by 5.4% year-on-year. The oil and gas sector had a zero growth after a decline in the first six months of the year while the growth in non-oil and gas industries slowed down to 10.4% in January-September. Construction and trade were the sectors that contributed to the most significant extent to the overall growth in GDP.
Armenia’s economic performance in Q3 was relatively weak. The growth in GDP was a mere 1.4% year-on-year and 2.6% over the first nine months of 2013. The balance of payments, however, improved, in particular due to the enhanced export potential, and the net inflow of money transfers rose by 10.6%. The surplus in the financial account improved drastically thanks to the successful issue by the Armenian government of Eurobonds in September 2013. Despite a slowdown in economic activities, the state budget had a surplus of 1% of GDP.
The Belarusian economy began to recover in Q3 and its GDP growth improved by 0.7% year-on-year. Retailing and construction had strong dynamics, while industry and, to a lesser extent, agriculture declined. At the same time, the gradual reduction in inflation rates, which had place over the first six months of the year, has stopped and the country’s balance of payments has worsened again. Belarusian international reserves decreased to US $6.8 billion as at September 2013.
The growth in Kazakhstan’s GDP improved to 5.7% over the first nine months of 2013, thanks to an increase to 6.6% year-on-year in Q3. However, the current account has worsened significantly, with a deficit of US $1.5 billion. The rise in public spending reached 2.8%, but a higher increase in revenues (5.7%) made it possible for the state budget to be closed with a deficit of less than 1% of GDP. The annual inflation rate went down to 5.4% by September 2013.
In Kyrgyzstan the GDP growth reached 10.5% in Q3. Many sectors contributed to this two-digit improvement. At the same time, the strong consumer demand for imports and low prices of exports contributed to the worsening of the balance of payments.
Moldova’s economy has strengthened its stable growth tendencies in Q3, especially in agriculture and the processing sector. It is expected to grow by 4.5% by the year end, with a gradual increase to 5% in the medium term provided that the investment climate is improved and efforts to stimulate exports are continued.
The economic situation in Russia has remained practically unchanged compared to the spring and the beginning of the summer. The extractive sectors have maintained positive growth rates, while the processing sector has decreased outputs. Capital investments had a negative growth again. As regards GDP, the year-end results are expected to be moderate, although it is possible that in Q4 economic growth will accelerate. The current economic situation provides grounds to expect a recovery in growth after a slowdown in 2013. Yet it is forecasted to be limited due to a relatively tight fiscal and monetary policy. In these conditions the growth in GDP can be between 2.5% and 3% in 2014 provided that the balance of payments and public finance remain stable.
Tajikistan has maintained its economic growth at a level of 7.2% despite a decline in industrial production (by 0.9%). Low prices and the foreign demand for aluminium and food products caused reductions in outputs in the metallurgical (by 6.4%) and food (by 13.5%) sectors, while the improved prices of cotton in the world markets made it possible to advance the textile production (by 10.6%). The economic growth is ensured by retailing (25.2%) and the services sector (16.8%), which are supported by incoming money transfers.
The growth in Turkmenistan’s GDP improved to 10.6% in Q3 year-on-year despite a slowdown in the growth in capital investments to 7.2% over the first nine months of the year and a reduction in exports (by 12%) and budget revenues (by 5.1%). The economic situation remains stable however: the surplus in the trade balance is significant and fiscal revenues have exceeded the planned threshold by 20.7%.
Uzbekistan’s GDP in Q3 maintained a high growth of 8.3% year-on-year and 8.1% over the first nine months of 2013. This is explained by a strong domestic demand stimulated by the government’s economic policy, lending activities by banks and private transfers. The enhancement of gas export routes has added impetus to the economic dynamics. The increase in export revenues and high GDP growth formed a surplus in the state budget (0.2% of GDP over the first nine months).
The Ukrainian economy continued to demonstrate negative growth in Q3: its GDP fell by 1.3% year-on-year. The balance of payments has worsened significantly after an improvement in the first six months of the year. The situation in the area of public finance remained complicated. The budget deficit over the period from January to September was UAH 35.2 billion (3.4% of GDP) compared to 2.4% and 0.9% over the same period of 2012 and 2011 respectively. The increase in the deficit was, in the first place, due to the growing public spending, from 25.6% of GDP in 2011 to 27.3% as at today.
The e-version of the publication is available online.
Additional Information
Eurasian Development Bank is an international financial institution founded by Russia and Kazakhstan in January 2006 with the mission to facilitate the development of market economies, sustainable economic growth and the expansion of mutual trade and other economic ties in its member states. EDB’s charter capital exceeds US $1.5 billion. The member states of the Bank are the Republic of Armenia, the Republic of Belarus, the Republic of Kazakhstan, the Kyrgyz Republic, the Russian Federation, and the Republic of Tajikistan. Read more at https://www.eabr.org.