The Quarterly Macroeconomic Review prepared by the Eurasian Development Bank (EDB) Chief Economist’s Group has changed its 2017 economic growth forecast for the region upward from 1.3% to 1.6%.  

The recovery of world commodity prices, combined with weakening foreign exchange imbalances, reportedly has a positive effect on trade flows of the EDB member countries.

“While in Q1 2016, exports of goods and services declined in all the EDB member countries, excluding Armenia, this year all these countries, without exception, have demonstrated some positive export growth—the preliminary balance of payments statistics show that Armenia’s exports of goods and services grew in Q1 2017 by 17.8% against the same period of last year, in Belarus this indicator grew by 20.7%, in Kazakhstan — by 24.5%, in Kyrgyzstan — by 20.5%, in Russia — by 33.7%, and in Tajikistan — by 22.7%. The economic recovery in Russia contributed to an improvement of the macroeconomic indicators in Armenia, Kyrgyzstan, and Tajikistan through the remittances channel,” notes Yaroslav Lissovolik, EDB Chief Economist.

The economic recovery, accompanied by subsiding inflationary risks, has had a positive effect on the household living standards in the region.  In Q1 2017, unlike in the same period of last year, real wages displayed some positive dynamics in the EDB member countries. Kazakhstan was an exception, with its rates of wage decline decelerating by 0.7 percentage point to 2% against the same period of last year.

The authors of the report note that the economic recovery observed in the EDB member states in the first half of 2017 has triggered a revision of the 2017 GDP forecast.  The GDP growth forecast for Russia has moved upward by 0.3 percentage points to 1.4%.  More significant revisions have been made for Kazakhstan and Armenia. The lagged effect of expansionary fiscal and monetary policies in 2016, combined with the quickly recovering remittances, was reflected in Armenia’s consumer demand dynamics registered in the first half of 2017.  Against this background, the 2017 GDP growth forecast for Armenia has been revised upward from 2.9% to 5.2%.  In Kazakhstan, the faster than expected economic recovery due to the favorable external economic environment and a more prominent effect of commissioning certain new facilities has laid the ground for improving the 2017 GDP forecast, which is estimated at 3.4%.

The Eurasian Development Bank (EDB) is an international financial organization founded by Russia and Kazakhstan in 2006.  The members of the Bank are Russia, Kazakhstan, Armenia, Tajikistan and Belarus (2010).  Other states or international organizations can become members by joining the Agreement Establishing the EDB. The Bank has authorized capital in exceeds US$1.5 billion, which was formed of contributions by its member states: Russia (US$1billion), Kazakhstan (US$500 million), Armenia (US$100,000), Tajikistan (US$500,000) and Belarus (US$15 million). The authorized capital may be increased by resolution of the Bank’s Council. The Bank has the status of an international organization, and is subject to international law.