Cau­ca­sus, Cen­tral Asia faces down­side risks: IMF

The Pak Banker - - Front Page -


IMF says coun­tries in the Cau­ca­sus and Cen­tral Asia continue to post a solid re­cov­ery from the global fi­nan­cial cri­sis, and the re­gion’s eco­nomic out­look re­mains fa­vor­able.

The IMF’s Re­gional Eco­nomic Out­look for the Mid­dle East and Cen­tral Asia, re­leased Novem­ber 11, projects growth in the re­gion at an av­er­age of about 5½ per­cent for 2012 and 2013. This re­silient growth re­flects high oil prices that are ben­e­fit­ing the re­gion’s oil and gas ex­porters, sup­port­ive com­mod­ity prices and re­mit­tance in­flows for the oil and gas im­porters, and, for both groups, mod­er­ate di­rect ex­po­sure to Europe, the IMF re­port says.

“The pos­i­tive out­look pro­vides an op­por­tu­nity to strengthen pol­icy buf­fers to pre­pare for any po­ten­tial ad­verse eco­nomic con­di­tions, such as a slow­down of world com­mod­ity de­mand or ris­ing food prices,” Juha Kähkö­nen, Deputy Di­rec­tor of the IMF’s Mid­dle East and Cen­tral Asia Depart­ment told a press con­fer­ence in Almaty, Kaza­khstan.

For the oil- and gas-im­port­ing coun­tries Ar­me­nia, Ge­or­gia, the Kyr­gyz Repub­lic, and Ta­jik­istan growth will re­main firm at 5 per­cent in 2012, be­fore in­creas­ing to 5.8 per­cent in 2013. Ro­bust re­mit­tance in­flows from Rus­sia and high com­mod­ity prices un­der­pin this out­look, with the Kyr­gyz Repub­lic ben­e­fit­ing from higher gold pro­duc­tion. In­fla­tion across the Cau­ca­sus and Cen­tral Asia is pro­jected to re­main fairly muted on av­er­age in 2012, on ac­count of rapidly fall­ing food in­fla­tion in the oil- and gas-im­port­ing coun­tries. How­ever, higher global food prices, if sus­tained, may rekin­dle in­fla­tion given the high sen­si­tiv­ity of lo­cal food prices to global prices, par­tic­u­larly in the oil and gas im­porters.

Oil- and gas-ex­port­ing coun­tries could cush­ion the im­pact through tem­po­rary sub­si­dies or sim­i­lar mea­sures, which their sub­stan­tial fis­cal space can ac­com­mo­date, the IMF as­sess­ment says. It adds that the oil and gas im­porters are slowly re­build­ing their fis­cal buf­fers. How­ever, these cush­ions still fall well short of what is needed to en­able a pol­icy re­sponse in the event of un­fa­vor­able developments in com­mod­ity mar­kets.

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