DUSHANBE, January 11, 2016, Asia-Plus — In the third quarter of 2015, economic activity in the CIS countries stabilized on the whole, thanks to the slowdown or a pause in its decline in Belarus, Russia and Ukraine, according to the Eurasian Development Bank (EDB).
In Q3 2015, the overall GDP of the CIS countries reportedly decreased by 3.9% year-on-year. In Q2 2015, the year-on-year decrease was 4.4%. Therefore, economic recession in the CIS countries has begun to recede, primarily because of the effect of the contracting comparison base in Russia, Belarus and Ukraine. In these three economies, the year-on-year decline in GDP diminished against the backdrop of growth or a slight decrease on Q2 2015, on a seasonally adjusted basis. This suggests that economic activity in the region has stabilized as its decline in the countries, which had been affected by recession earlier than the others, has slowed down. These conclusions are made in the new issue of
The CIS Macromonitor
published by the Research Department of Eurasian Development Bank (EDB).
The group of oil and gas exporters, which comprises Russia, Kazakhstan and Azerbaijan, has improved their overall GDP dynamics to a minimal extent: in Q3 2015 the real GDP decreased by 3.7% year-on-year, while in Q2 2015 the decrease was 3.8%. The reason for this was that economic recession in Russia has become less intense, while in Kazakhstan and Azerbaijan GDP growth year-on-year was zero, compared to earlier positive figures.
The countries that export labor (Armenia, Kyrgyzstan, and Tajikistan) maintained positive growth in their aggregate GDP in Q3 if measured year-on-year, but it was significantly lower compared to Q2 2015 (2.6% vs 5.4%). In this group, growth was still due to the growing mining and metallurgy sectors in Armenia and Kyrgyzstan. Most other sectors in these countries worsened their patterns in Q3 2015 because of decreased money transfers from migrants due to the devaluation in Russia, as well as the lower inflow of investment and demand for their exports.
The CIS Macromonitor
states that the decline in the GDP of the countries with diversified exports (Belarus, Ukraine and Uzbekistan) remained insignificant, standing at 6.4%; however it was significantly lower compared to Q2 2015 when it reached 11.8%. The changes in this indicator reflect, in the first place, the dynamics of Ukraine’s economy where after the internal armed conflict eased the signs of a post-war economic recovery have begun to appear.
The study reports that the new turn of falling oil prices in the mid-year exerted pressure on the national currencies of the CIS countries. In the worsened external context, the central banks changed their policies during the third quarter towards higher flexibility of exchange rates of their national currencies.
The base scenario for the world’s economic development suggests that economic growth in developed countries, primarily the U.S., the Eurozone countries, and Japan, will be maintained at the current rates. In addition, China’s economy will stabilize its growth, in particular, due to a more flexible foreign exchange policy of its central bank. Oil prices will depend, on the one hand, on the pace of the growth of exports from the OPEC countries, including Iran after international sanctions against it will be lifted, and reduced production in the fields with relatively high development costs, primarily in the U.S., on the other hand. We expect the average price of Brent oil in 2016 to be US $40-50 per barrel.
Given the above scenario, EDB experts forecast that the aggregate GDP of the CIS countries will fall by 3.5 to 4% in 2015 and then resume rising, increasing by up to 1% in 2016 year-on-year.
