Improvements in the global economy may accelerate growth in the EAEU countries

_ EDB. Moscow, 3 May 2017.

In April 2017, the external environment improved to an extent for Eurasian Development Bank’s (EDB) countries, due to growing optimism in the world markets associated with improvements in the global economy. These are the findings of The Macroeconomic Review prepared by the Chief Economist Group at EDB.

The report states that in late April the International Monetary Fund improved the outlook for the global economic growth in 2017 from 3.4% to 3.5%, having raised projections for China from 6.5% to 6.6% and advanced countries from 1.9% to 2%. The scale of these improvements is insignificant but what’s important is that the IMF signals improvements in the global economy after years of stagnation.

As for the EDB countries, the improved external environment will stimulate economic activity by supporting raw material prices, capital flows to developing markets and money remittances. A review of leading indicators for the EDB countries confirms that the improving external environment has positive effects for economic activity.

The Russian economy remains rather sensitive to external factors. Improvements in leading indicators here include an increase the transport sector’s freight turnover by a record high of 5.4% year-on-year since 2010 (1.5% the year before). The decline in inflation almost to the Central Bank’s benchmark of 4% has allowed the regulator to reduce the key rate by 50 basis points in late April. The continued reduction in the key rate creates opportunities for greater economic growth in the second half of 2017.

Belarus has demonstrated the most significant acceleration of economic growth over the year. In January-March, its GDP regained growth and went up by 0.3% year-on-year. Armenia’s economic growth rates also look positive. In March 2017, its economic activity indicator accelerated to 6.8%, after 6% in February. In Kazakhstan, the increase in the short-term economic indicator was 6.8% in March 2017 — the highest since December 2013. The Kyrgyz Republic and Tajikistan also maintained high growth rates in the first quarter.

“These tendencies of the recent month suggest that all the EDB countries may attain positive economic growth rates by the end of the year. This will help to expand their opportunities for export enhancement and use integration to ensure further recovery of economic activity. With the stabilisation of raw material prices and exchange rates in most EDB countries, it becomes more probable that mutual trade in the EDB region will demonstrate positive growth rates in 2017,” Yaroslav Lissovolik, Chief Economist at EDB, pointed out.

Source: http://www.eabr.org/

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