DUSHANBE, November 1, 2010, Asia-Plus — The International Monetary Fund (IMF) expects growth in the Caucasus and Central Asia (CCA) to increase from 3 percent in 2009 to 5 percent in 2010.
Mr. David Owen, Deputy Director of the IMF’s Middle East and Central Asia Department, noted on October 28 that the economic upturn in CCA is gathering momentum, with growth for the region projected to increase to 5¾ percent in 2010 from 3½ percent in 2009.
According to him, the fiscal stimulus applied by many governments in the region—together with a favorable external environment—had helped spur the recovery from the global crisis. The upturn in Russia’s economy has benefited the region, mainly through trade and remittance channels, as has the rise in oil prices. “The outlook for the region is broadly positive, although in some countries it will take time for per capita disposable income to return to pre-2009 levels,” Owen said.
Countries in the Caucasus and Central Asia differ substantially in terms of per capita GDP, which ranges from under $700 in Tajikistan to $7,000 in Kazakhstan. Half of the region’s countries are exporters of oil and gas (Azerbaijan, Kazakhstan, Turkmenistan, and Uzbekistan), while the others are importers (Armenia, Georgia, Kyrgyzstan, and Tajikistan).
The IMF’s Regional Economic Outlook for the Middle East and Central Asia says that growth in 2010 is expected to be strongest among the region’s oil and gas exporters. With oil prices expected to remain near $80 per barrel in 2011, these countries should grow at similar rates in 2011.
Among the oil and gas importers, Armenia and Georgia are forecast to grow at 4 percent and 5½ percent, respectively, in 2010, compared with negative growth in 2009. In Tajikistan, growth is estimated at 5½ percent for 2010—about 2 percentage points higher than in 2009. Buoyed by Russia’s recovery, all three countries are projected to grow at 4–5 percent in 2011, the IMF report says.
In Kyrgyzstan and Tajikistan, banking sectors are suffering from high and rising nonperforming loans (NPLs), and private-sector growth is subdued.
In Tajikistan, NPLs have increased most notably among state enterprises, the agricultural sector, and leasing activity.
As far as the challenges beyond the crisis are concerned, in Tajikistan, given pressing social and development needs, as well as the cost of recapitalizing the banking system, the fiscal stance in 2011 is expected to remain broadly neutral.
Due to their experience with high inflation and often unsuccessful attempts by central banks to resist currency depreciation, dollarization in CCA countries remains high, especially in Armenia, Georgia, and Tajikistan.
