Eurasian Development Bank economies to start economic growth in 2021

The Eurasian Development Bank (EDB) has published its Macroeconomic Forecast for 2020. The bank forecasts its member states’ aggregate GDP to contract by 3.8% in 2020, after a growth of 1.7% the year before. 

Armenia’s GDP is expected to decline by 6.4%, Belarus’s 1.5%, Kazakhstan’s 3%, the Kyrgyz Republic’s 7.5%, and Russia’s 4%. In Tajikistan, economic growth will slow down to 4.5% from 7.5% in 2019. A deeper economic contraction in the region has been avoided, largely due to government support to the population and businesses. 

The largest anti-crisis packages are being offered in Kazakhstan and Russia (about 8.7% and 4.5% of GDP, respectively), which have substantial fiscal reserves by regional standards. The EDB estimates this should compensate for about 2-3% and 1.3-2.3% of Kazakhstan and Russia’s GDP losses this year, respectively. Significant social and economic support (about 3.7% of GDP) provided to Armenia should mitigate the decline in the country’s output by about 1.8%-2.2% in 2020. 

In Belarus, the Kyrgyz Republic, and Tajikistan, government support is relatively small (around 1.1%, 2.4%, and 2.5% of GDP, respectively), partly because of limited fiscal reserves. 

EDB analysts believe that the pace at which the Bank’s member economies will recover from this year’s turmoil will largely depend on the future developments around the pandemic. The baseline projection is based on an assumption that COVID-19 will slow down and restrictive measures will be eased globally and in the Bank’s countries in the first half of 2021.