Economic growth in Central Asia and the South Caucasus will remain sluggish in 2020, the International Monetary Fund says in its latest regional outlook, published late last month.
Overall, the IMF estimates 4.4 percent economic growth in this region next year.
Growth had been steadily climbing following the sharp slump in 2016, when region-wide growth decelerated to 2.3 percent owing to the slowdown in the oil-driven economies and economic crisis in the Russian Federation.
Today, most countries in Central Asia are reportedly not doing badly. Kazakhstan and Kyrgyzstan have reportedly recovered quickly. Uzbekistan’s liberalizing turn has provided further impetus to its economic outlook.
As for the external markets on which Central Asia and the South Caucasus depend, the IMF expects Russia’s real GDP growth to accelerate to just under 2 percent in 2020 (after growing close to 1 percent this year). Growth in Russia will support growth in remittances.
The main challenge for the region continues to be a lack of economic diversification and geographic distance from markets. Although Turkmenistan and Kazakhstan have seen their fortunes rise owing to their oil and gas reserves, dependence on hydrocarbons hurts competitiveness in other sectors. Other countries in the region are dependent on mineral commodities to drive a substantial chunk of their exports: Kyrgyzstan with gold and Tajikistan with gold and aluminum. This also leaves them vulnerable to global price fluctuations.
