The EDB Macroeconomic Review: Strong Growth in the Region’s Economies. EDB member countries’ aggregate GDP increased by almost 4% in 2023

16 February 2024

Almaty, 16 February 2024. The Eurasian Development Bank (EDB) has released the latest Macroeconomic Review for its six member states. This regular publication provides a roundup of the macroeconomic situation and projects near-term developments in the member countries. The review also contains detailed statistics on key macroeconomic indicators.

The Macroeconomic Review highlights that global economic growth was highly varied in 2023 and is expected to slow in the near to medium term. The U.S. GDP increased by 2.5%, surpassing most analysts’ expectations, while the euro area was on the brink of recession, with GDP growth reaching only 0.5%. EDB analysts suggest that the high inflation seen in recent years is no longer a global trend. Most developed countries have successfully reduced it, partly due to external factors such as lower transportation costs and world prices for most commodities. Nevertheless, price increases still exceed central bank targets. The high interest rates in the U.S. and euro area and their restraining effect on the global economy are expected to remain among the most significant trends in 2024. Additionally, shifts in cross-country investment and trade flows pose risks to economic growth in certain regions and globally.

In the face of a challenging external economic environment, the EDB region exhibited a strong recovery in 2023. The aggregate GDP of the Bank’s member states increased by almost 4%, marking the highest growth rate in the past decade, excluding the post-pandemic period. According to EDB analysts, this growth was propelled by internal drivers such as robust consumer and investment demand, as well as effective adjustments in production to accommodate changing operating conditions. It is highly probable that the economies’ adaptation to the new operating environment concluded in 2023.

Armenia’s economy has maintained high growth rates for the second consecutive year, with economic activity increasing by 9.4% year-on-year as of the end of 2023. In late 2023 and early 2024, Armenia experienced deflation, allowing its Central Bank to continue its cycle of monetary policy easing.

EDB analysts note that consumer demand was the most important driver of economic growth in Belarus in 2023. In 2024, the nation’s economy is expected to continue growing at a faster pace than in the past decade. In January 2024, annual inflation rose to 5.9% year-on-year, influenced by higher price pressures from domestic demand, the labour market and inflation in Russia. However, price regulation continues to restrain consumer price growth.

Kazakhstan’s economy exhibited robust growth, surpassing 5% by the end of 2023, largely due to government programmes aimed at unlocking the country’s investment potential. Companies have been actively developing thanks to favourable conditions for doing business. The Macroeconomic Review highlights that investment and trade increased by 13.7% and 11.3%, respectively, over the year. Inflation in Kazakhstan continued to decline, with the year-on-year inflation rate dropping from 9.8% in 2023 to 9.5% in January 2024, laying the groundwork for further monetary policy easing.

The Kyrgyz Republic also experienced active development, with GDP growing by 6.2% in 2023, supported by stronger consumer demand and increased investment activity. Inflation in the Kyrgyz Republic halved to 7.3% year-on-year in 2023, but the National Bank maintained its discount rate unchanged at 13% per annum due to persistent pro-inflationary risks.

EDB analysts noted a gradual weakening of Russia’s business activity at the beginning of the year due to tighter monetary conditions aimed at curbing inflationary processes, creating conditions for a slowdown in GDP growth in 2024.

In Tajikistan, strong domestic demand and increased exports drove an 8.3% GDP growth in 2023. Inflation declined to 3.8% year-on-year at the end of 2023, close to the lower bound of the National Bank’s target range.

EDB analysts highlight risks associated with limited opportunities to boost exports both in terms of value and quantity due to the global economic slowdown. The review suggests that in the medium term, domestic demand, enhanced regional cooperation, exploration of new niches in the international division of labour, and increased redistribution in production may become more reliable sources of sustainable growth for EDB member states.

The Macroeconomic Review is available on the Bank’s website.


Additional Information:

The Eurasian Development Bank (EDB) is an international financial institution investing in Eurasia. For more than 15 years, the Bank has worked to strengthen and expand economic ties and foster comprehensive development in its member countries. The EDB’s charter capital totals US $7 billion. Its portfolio consists principally of projects with an integration effect in transport infrastructure, digital systems, green energy, agriculture, manufacturing, and mechanical engineering. The Bank adheres to the UN Sustainable Development Goals and ESG principles in its operations.

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