The Eurasian Development Bank (EDB) yesterday published its Macroeconomic Review with forecasts for the economic development of its member states for 2021 and the medium term. The review states that, at the beginning of this year, the global economy started to steadily recover. 

The Macroeconomic Review, in particular, notes that the year 2021 will become a period of strong economic recovery for EDB member nations.  The Bank projects the aggregated GDP growth rate of its member countries at 3.3 percent, after a 3-pecent decline in 2020.  

The EDB expects its member countries’ currencies to stabilize against the U.S. dollar in 2021.  At the beginning of this year, currencies of countries in the EDB region of operations remain relatively stable against the US dollar.

The national currencies are reportedly supported by rising oil prices.  At the same time, the Russian ruble continues to be affected by geopolitical risks, which limits the room for its strengthening.

The report notes that In 2021, the average exchange rate of the Armenian dram against the U.S. dollar is projected at around 521, the Belarusian ruble 2.63, the Kazakhstani tenge 421.6, the Kyrgyz som 84.9, the Russian ruble 73.6, and the Tajik somoni 11.5.

The Macroeconomic Review notes that the significant acceleration of inflation in the Bank’s member countries will be temporary and inflation will slow down in the second half of 2021. The main reason for the rise in consumer prices was a substantial global increase in food prices. Under the influence of this factor, inflation in the Bank’s region of operations remained high at the start of the year, averaging 6.3% year-on-year in February 2021. Pandemic-driven supply chain disruptions and COVID-19 response costs have exerted additional pressure on prices. The impact of all these factors on consumer prices will be gradually diminishing over 2021. Combined with stabilization of the national currency exchange rates, this would help inflation in the region to fall to an average of 4.5% year-on-year by the end of 2021.

Recall, the Tajik national currency, the somoni (TJS), last year lost 16.6 percent of its value against the U.S. dollar at the National Bank rate – from 9.69:1 to 11.3:1. 

Last year, Tajikistan saw sharp currency devaluation in late March, when the somoni lost nearly 5.3 percent of its value against the dollar at the National Bank rate, when an average official buying rate of USD against TJS increased from 1:9.7 in mid-March to 1:10.2 on March 30.  

The Eurasian Development Bank (EDB) is an international financial institution promoting integration and development in its member countries – Armenia, Belarus, Kazakhstan, the Kyrgyzstan, Russia, and Tajikistan. The EDB's charter capital totals US $7 billion. The Bank was established in January 2006 by Russia and Kazakhstan and is headquartered in Almaty. The EDB’s portfolio mainly consists of transport infrastructure, energy, chemical, mining, and mechanical engineering projects with a high integration effect.