The EDB presents the latest issue of the Macro Review of its member states

12 May 2021

Moscow, 11 May 2021. EDB analysts have published another issue of the Macro Review. This is an intermediate issue between the projections published in March and June that monitors current macroeconomic developments in the EDB member states – Armenia, Belarus, Kazakhstan, the Kyrgyz Republic, Russia, and Tajikistan.

Evgeny Vinokurov, Chief Economist at the EDB and the Eurasian Fund for Stabilization and Development (EFSD), notes that the global economy has started to grow. The world’s business activity is improving. The global composite Purchasing Managers’ Index (PMI) rose from 54.8 points in March to 56.3 in April. While manufacturing remains the driver, services are also becoming more active. The global economic recovery is currently being driven by the U.S. with its extensive fiscal and monetary stimulus. Global economic developments are broadly within the EDB’s baseline projections expecting global economic growth to accelerate in 2021 to 5.7% at year-end. Improved global business activity and ultra-soft policies by leading central banks continue to support commodity prices. Energy, metals and fertilisers are more expensive now than before the pandemic, and significantly more expensive than at the end of the last year. All of this is favourable for the EDB member states’ exports.

In Q1, the developments in the EDB region were in line with global trends. The Russian economy is showing strong dynamics with a year-on-year growth of 0.5% in March. The Bank is confident that it will recover stably. Kazakhstan, where GDP declined to 1.6% year-on-year in January–March from 2.9% in January–February, also continued to recover. The recovering demand in Russia and globally is supporting the Belarusian economy, where export-oriented manufacturing ensured a 0.9% year-on-year increase in GDP in Q1. Tajikistan is showing high growth rates, helped by growing domestic demand. Economic activity in Armenia rose in March by 3.8% year-on-year thanks to stronger external demand and a gradual recovery of domestic demand. In Kyrgyzstan, business activity remained subdued at the beginning of the year, but the recession somewhat eased. In Q2, the annual growth of the member states’ GDPs will be significantly higher – last year, this was the period when the first wave of the pandemic hit the economies hard. Subsequently, growth rates are projected to level off and the member countries’ aggregate GDP is projected to increase by 3.3% in 2021.

The rises in consumer prices in the EDB member states continue to exceed national/central bank targets. The Bank estimates average inflation in the region at 6.4% year-on-year at the end of March. High price increases are due to global food prices, weaker national currencies’ pass-through effects, disruptions in global supply chains, and higher inflationary expectations. At the beginning of the year, the EDB projected a temporary acceleration in inflation, to slow down in the second half of 2021 as the pro-inflationary factors subside. These expectations remain valid. Greater inflationary pressures are forcing the region’s monetary regulators to tighten their policies. The Bank of Russia raised its key rate by 0.50 percentage points in April and the National Bank of Belarus by 0.75 percentage points. The EDB expects that a tighter monetary policy should help to reduce inflation, but if it goes too far, it could stifle economic growth.

The full version of the Macro Review is available in the Research section on the EDB’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 and is headquartered in Almaty. The EDB’s portfolio mainly consists of projects with an integration effect in the areas of transport infrastructure, digitalisation, green energy, agriculture, industry, and mechanical engineering.

The EDB Media Centre:

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

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

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