Caucasus, Central Asia Feel Crisis Impact, But Set for Modest Upturn
| Author | International Monetary Fund |
Ahmed told a press conference in Istanbul that CCA policymakers have responded to the downturn by easing fiscal and monetary policies and strengthening social safety nets. The international community has also provided assistance to the region. For some countries, however, additional donor support will be needed to contain the adverse impact of the crisis, he said.
"The region as a whole should see a modest recovery in 2010, although the energy importing low-income countries in the region still face a difficult year ahead," said Ahmed, speaking ahead of the IMF-World Bank Annual Meetings.
CCA countries differ substantially in terms of per capita GDP, which ranges from US$795 in Tajikistan to US$8,500 in Kazakhstan. Half of the region's countries are exporters of gas and oil (Azerbaijan, Kazakhstan, Turkmenistan, and Uzbekistan), while the others are importers (Armenia, Georgia, the Kyrgyz Republic, and Tajikistan). This key difference largely accounts for the disparity in the outlook across countries.
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Most CCA energy exporters have weathered the global downturn reasonably well and are projected to record solid growth in 2009, owing to long-term energy export contracts, supportive policies, and in some cases limited linkages to international markets. One exception is Kazakhstan, which is in the midst of a banking crisis as well as being hit by lower oil prices, and is likely to see GDP contract by about 2 percent in 2009, with recovery in 2010 held back by lingering problems in the banking system.
In contrast, Azerbaijan, Turkmenistan, and Uzbekistan are projected to register robust growth in 2009, supported mainly by public spending made possible by ample public savings accumulated during the boom years. With global energy demand increasing again, these countries are expected to grow strongly in 2010, according to IMF projections.
The region's four energy importers, on the other hand, are facing a marked slowdown in growth and deteriorating living standards mainly as a result of a sharp drop in remittances (Charts 1 and 2) from Russia, which is also in recession and has had to shed jobs previously filled by CCA workers.
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These countries are being hit to varying degrees. Armenia, which...
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