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Outlook: Central Asian economies |
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Muzaffar Hameed |
August 25, 2011, 05:31:03 AM |
A World Bank recent report reveals that after sustaining a sharp decline in output during the global financial crisis and recession, economic growth is returning across the Europe and Central Asia (ECA) region. Every country in the region is expected to record positive growth during 2011. But growth is more tepid in Central and Southeastern Europe relative to the Commonwealth of Independent States (CIS) where elevated commodities prices have lifted net exports, and increased migrants’ remittances and private consumption. Higher food and energy prices threaten to increase poverty, particularly in lower income economies in the CIS such as Armenia, Krygyz Republic, and Tajikistan, and add more macroeconomic pressures across the region. Taking advantage of improved global growth prospects will require new, deeper structural reforms to improve international competitiveness while ensuring that financial sector vulnerabilities are resolved transparently. The region faces long-standing economic and social challenges. Countries in the ECA region are projected to recover from the crisis more slowly than in other regions. GDP grew at a robust rate of about seven per cent in 2007 before contracting to about –6.5 in 2009. Growth in 2010 reached around 4.5 and prospects for 2011 and 2012 are only slightly better, as compared to over 5.5 in Latin America and about nine per cent in developing Asia in 2010.
The region has faced the greatest fiscal pressures among all the world’s regions during the global economic crisis. Average fiscal deficits were -5.5 of GDP in 2009 and are expected to be -4 per cent in 2010. By comparison, the 2010 figures are -2.6 in Latin America and about -2.9 per cent in East Asia. General government spending in the region’s middle-income countries such as Poland, Russia, Ukraine, and Turkey is now higher than 40 percent of GDP in contrast with the 30 per cent for middle-income countries in other regions. Ensuring that governments can strengthen inclusion and address food and fuel price increases will become more difficult with tighter budgets, unless government spending is made more efficient.
The International Monetary Fund is predicting five per cent GDP growth in 2011 on average for Commonwealth of Independent States. However, nations specializing in exporting valuable commodities will have a significantly higher growth rate and predicts growth for Central Asia’s will be above the CIS average. Turkmenistan is expected to post a higher than average 9 percent growth in 2011 on the strength of its gas exports. The IMF predicts 6.4 percent Turkmen GDP growth in 2012. Uzbekistan, based on the strength of projected cotton and gold exports, will record GDP growth of seven per cent for both 2011 and 2012. Full story |
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