The EDB publishes a macroeconomic overview of its member countries
Moscow, 10 August 2021. The Eurasian Development Bank (EDB) published The EDB Macroeconomic Review. August 2021. This is an intermediate online publication between the two forecasts circulated in June and September. The review monitors current macroeconomic developments in the EDB member countries – Armenia, Belarus, Kazakhstan, the Kyrgyz Republic, Russia, and Tajikistan.
As stated in the review, the global economy continued to grow in June and July. The aggregate global PMI was 55.7 points in July (56.6 in June, and 58.5 in May), remaining at its highs for the past 15 years. The EDB notes strong recovery growth fuelled by ultra-soft monetary policies of the major central banks, yet still highly uncertain in terms of its steadiness.
“Coronavirus outbreaks are persisting and virus mutations have markedly cooled optimism in the markets. We cannot predict with certainty how the pandemic will evolve. The baseline scenario expects vaccination rates to go up and the global spread of the coronavirus to gradually slow down. However, the risks are high,” said Evgeny Vinokurov, Chief Economist at the EDB and the Eurasian Fund for Stabilization and Development (EFSD).
In the first half of the year, the situation in the EDB region was in line with global trends. Almost all countries in the region demonstrated rapid economic recovery, with a peak in April-May and a slowdown in June. Russia’s GDP grew by 4.6% year-on-year over the first six months of 2021. Business activity was supported by the effects of the easing of fiscal and monetary policies in 2020. As early as in the second half of the year, these stimuli are expected to be reduced and Russia’s economic growth to slow down towards its potential rates.
Kazakhstan’s GDP grew by 2.2% year-on-year in January-June. Despite the challenging epidemiological situation, enterprises are more optimistic about business conditions for the next six months. Armenia and Tajikistan showed strong economic growth of 5.0% and 8.7% year-on-year, respectively, driven by strong external and expanding domestic demand. Belarus’s economy grew by 3.3% year-on-year over the first half of the year, but the monthly dynamics weakened in May and June. Developments in the gold sector continued to restrain economic activity in Kyrgyzstan, where GDP fell by 1.7% year-on-year.
“Our baseline scenario projects a 4.0% increase in the member countries’ aggregate GDP in 2021,” noted Evgeny Vinokurov.
Inflationary pressures remained high in the Bank’s member states. In June, the region’s average inflation was estimated at 7.2% year-on-year. Higher costs and inflation expectations continued to weigh on consumer prices. The region’s monetary regulators have been tightening their policies in this context: in July and early August, Armenia, Belarus, Kazakhstan, Kyrgyzstan, Russia, and Tajikistan raised their key rates by 0.5, 0.75, 0.25, 1, 1, and 1 percentage point, respectively. It should be noted that in June-July there were signs of stabilisation in world commodity prices.
“If the rally in global markets has come to an end, we should expect a slowdown in inflation in the Bank’s member states in the second half of the year. For now, we consider this scenario as a base case, but we still should keep in mind the persisting inflation risks,” Evgeny Vinokurov stressed.
Other reports by the EDB and EFSD are available in the Research section on the Bank’s website and the Publications section on the Fund’s website.
Additional Information:
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 objectives of the EFSD are to assist its member countries in overcoming the consequences of the global financial crisis, ensure their economic and financial stability, and foster 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 Eurasian Development Bank (EDB) is an international financial institution promoting integration and development in its member countries. For 15 years, the Bank has worked to strengthen and broaden economic ties and foster comprehensive development in its member countries – Armenia, Belarus, Kazakhstan, the Kyrgyz Republic, Russia, and Tajikistan. The EDB's charter capital totals US $7 billion. 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 Bank adheres to the UN Sustainable Development Goals and ESG principles in its operations.
The EDB Media Centre:
Azima Sapargaliyeva +7 (777) 750 00 08 (Almaty)
Sergey Gorbachev +7 (916) 727 22 00 (Moscow)