On October 18, the Eurasian Development Bank (EDB) released the latest Macroeconomic Review for its six member nations.  This regular publication provides a roundup of the macroeconomic situation and projects near-term developments in the member countries. The review also contains detailed statistics on key macroeconomic indicators.

The report, in particular, notes that the EDB region’s economies continue to grow strongly, with the combined GDP of the Bank’s member nations increasing by 2.8% year-on-year in January–August 2023. This growth rate marks a 0.8 percentage point acceleration compared to the first half of the year.

The dynamics of the region’s aggregate GDP were largely influenced by stronger economic growth in Russia and Belarus.   

The economies of Central Asia and Armenia reportedly continued to grow steadily in January–August 2023.  During this period, economic activity in Armenia, Kazakhstan and the Kyrgyz Republic increased by 10.4%, 4.9% and 3.3% year-on-year, respectively, driven by continued robust domestic demand. EDB analysts anticipate that the economies of Central Asian countries and Armenia will maintain high growth rates by the end of this year.

The aggregate growth rate of consumer prices in the EDB member countries was 6.3% year-on-year in September, up from 5.8% in August. The Macroeconomic Review highlights that higher inflation resulted from the realization of pro-inflationary risks in Russia. EDB experts note the risk of accelerated inflation in certain countries of the region before the year-end.

The report says that in Russia, price growth continued to accelerate to 6.0% year-on-year in September, following 4.3% in July.  Price pressures intensified due to the rapid expansion of domestic demand, the pass-through effect of the Russian ruble weakening on prices and higher inflation expectations.  EDB analysts project further inflation acceleration in Russia in the remaining months of the year, influenced by the above factors.  Against the backdrop of increasing price pressure, the Bank’s experts believe that a further increase in the Bank of Russia’s key rate is likely.

In Belarus, inflation reportedly hit a historic low of 2.0% year-on-year in September, down from 2.3% in August, largely due to price controls. Inflation in Belarus is expected to accelerate by the end of the year due to rising production costs amid growing domestic demand and higher inflation in Russia.

In Kazakhstan and Kyrgyzstan, EDB analysts expect a further decline in annual inflation rates as the high rates from the previous year are excluded from the calculations, and inflationary pressures from global markets ease. If inflation decreases, the Bank’s experts admit that the National Bank of Kazakhstan could further reduce its base interest rate, and that Kyrgyzstan could initiate a series of rate cuts.

In Armenia, annual price growth returned to positive values, at 0.1% year-on-year, after experiencing deflation during the summer months. 

Meanwhile, the Bank’s analysts forecast a higher consumer price growth in Tajikistan in the second half of the year, owing to strong domestic demand, increased world energy prices and price growth in Russia.

The report says inflation in Tajikistan accelerates under the influence of strong domestic demand, rising world energy prices and rising prices in Russia.  

Inflation reportedly rose from 2.3 percent in July to 4.2 percent in August.  Price growth has returned to the target range of the National Bank of Tajikistan (NBT) – 6.0 percent (+ / - 2 percent).  

The Monthly Macroeconomic Review is a publication produced by the Chief Economist Group of the Eurasian Development Bank analyzing the economy of EDB member nations.  This report assesses the short-term prospects for their economies based on the latest leading indicators.

It is to be noted that inflation in Tajikistan’s consumption sector accelerated sharply in August and September after moderate growth in previous months. 

In August, consumer prices and tariffs rose on average 0.6 percent and in September, consumer prices and tariffs rose on average 0.7 percent.  Over the first seven months of this year, average monthly increase in prices and tariffs amounted to 0.37 percent.  

In September, prices of products of the food industry, non-foodstuffs as well as prices and rate for services rose 0.8%, 0.5% and 0.6 percent, respectively.     

Thus, over the first nine months of this year, inflation in Tajikistan has stood at 3.9 percent, which is 0.6 percent higher than in the same period last year.  

The Eurasian Development Bank is an international financial institution investing in Eurasia.  For more than eighteen years, the Bank has worked to strengthen and expand economic ties and foster comprehensive development in its member countries – Armenia, Belarus, Kazakhstan, Kyrgyzstan, Russia, and Tajikistan.  The EDB's charter capital totals US$7 billion.  Its portfolio mainly consists of projects with an integration effect in transport infrastructure, digital systems, green energy, agriculture, manufacturing, and mechanical engineering.  The Bank’s operations are guided by the UN Sustainable Development Goals and ESG principles.  The Eurasian Development Bank has observer status in the UN General Assembly.