EBRD predicts dip in Central Asia growth

1 Nov 18

Central Asian countries will see growth easing this year and next because of efforts to reduce deficits and a fall in commodity prices.

According to the European Bank of Reconstruction and Development, growth in Central Asia fell to 4.6% in the first half of 2018, from 4.8% in 2017.

In its latest Regional Economic Prospects report, the bank added this reflected “a need for fiscal consolidation in the region”, as well as slower growth in the extractive sector.

Growth is expected to moderate to 4.2% in 2019, it added.

In Turkmenistan, growth has slowed because of the “absence of major structural reforms”, to 6.2% 2018 and 5.6% in 2019, compared with 6.5% in 2017.

The EBRD said: “Contributions to growth from public spending would be limited in light of fiscal consolidation efforts.”

In Kazakhstan, growth could slow to 4.0% in 2018 and 3.5% in 2019, from 4.1% last year, as a result of a slowdown in oil output. The EBRD added that investment in the oil and gas sector, however, could support economic growth.

Uzbekistan also saw its economic growth slightly decelerate this year, as a decline in private consumption because of price increases. Growth is expected to slow from 5.3% in 2017 to 5.0% in 2018 and 4.5% in 2019, as a result of inflation and a widening of the trade deficit.

The only country in the region expected to experience solid growth is Mongolia, which saw growth increase to 5.1% in 2017, from just 1.2% the year before. For 2018, growth is forecast to be at 6.1% and 6.0% in 2019, driven by growth in mineral exports and strong foreign investments into the country.

Earlier this year, the OECD warned that Central Asia would face a challenge to achieve sustainable growth as the “commodity super cycle” was coming to an end.

Commodity exports have driven the region’s strong economic performance since the 2000s. Growth has averaged 7%.

The OECD has suggested Central Asian need to be more sustainable, inclusive and diverse.


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