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CAUCASUS / ECONOMIC OUTLOOK
STORY: CAUCASUS / ECONOMIC OUTLOOK
TRT: 1.56
SOURCE: IMF
RESTRICTIONS: NONE
LANGUAGE: ENGLISH / NATS
DATELINE: RECENT, WASHINGTON, DC
RECENT, WASHINGTON, DC
1. Med shot, IMF seal
2. Wide shot, man rides bike by IMF
3. SOUNDBITE (English) Masood Ahmed, Director, Middle East and Central Asia Department, International Monetary Fund (IMF):
"The countries of the Caucasus and Central Asia are going through a period of solid growth, about five percent both for the oil exporting countries and for the oil importing countries. Part of this is explained by the continued high price not just of oil but of other commodities, gold and other commodities that are exported by these countries. Part of it also comes from the continued stable outlook in Russia which is a big interlocutor for these countries."
4. Various shots, IMF exteriors
5. SOUNDBITE (English) Masood Ahmed, Director, Middle East and Central Asia Department, International Monetary Fund (IMF):
"The main challenges for the countries in the Caucasus and Central Asia are first of all to take advantage of the current period of high growth, to strengthen their resilience both to shocks from the rest of the world either in terms of a slowdown in Russia or a spillover from Europe, or to a slowdown in their own economies; second to improve the business environment and to improve the transparency with which money is spent in these countries and the revenues from exports of commodities are brought onto their own budgets so that there is a more complete picture of their public finances that is transparent for their own citizens and for the rest of the world; and finally, many of these countries are landlocked and their future prospects will be greatly improved through more cooperation at a regional level that's good for them and is good for the region as a whole."
6. Wide shot, IMF exterior
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 favourable, the International Monetary Fund (IMF) says in its latest assessment.
The IMF's Regional Economic Outlook for the Middle East and Central Asia, released Sunday (11 November), projects growth in the region at an average of about five and a half percent for 2012 and 2013.
This resilient growth reflects high oil prices that are benefitting 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 countries of the Caucasus and Central Asia are going through a period of solid growth, about five percent both for the oil exporting countries and for the oil importing countries. Part of this is explained by the continued high price not just of oil but of other commodities, gold and other commodities that are exported by these countries. Part of it also comes from the continued stable outlook in Russia which is a big interlocutor for these countries," said Masood Ahmed, Director, Middle East and Central Asia Department, IMF.
Growth for the region's oil- and gas-exporting countries—Azerbaijan, Kazakhstan, Turkmenistan, and Uzbekistan—is projected to moderate slightly to about five and a half percent in 2012 and 2013 from about seven percent in 2011, with lower growth in hydrocarbon production. However, public spending and directed credit will continue to ensure robust activity in the non-oil sector.
For the oil- and gas-importing countries—Armenia, Georgia, the Kyrgyz Republic, and Tajikistan—growth will remain firm at five 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 benefitting 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.
"The main challenges for the countries in the Caucasus and Central Asia are first of all to take advantage of the current period of high growth, to strengthen their resilience both to shocks from the rest of the world either in terms of a slowdown in Russia or a spillover from Europe, or to a slowdown in their own economies; second to improve the business environment and to improve the transparency with which money is spent in these countries and the revenues from exports of commodities are brought onto their own budgets so that there is a more complete picture of their public finances that is transparent for their own citizens and for the rest of the world; and finally, many of these countries are landlocked and their future prospects will be greatly improved through more cooperation at a regional level that's good for them and is good for the region as a whole," Ahmed said.
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 unfavourable developments in commodity markets.
Should severe shocks materialise, all countries have the space for relaxing monetary policy, the report notes. In addition, oil and gas exporters have the important option of drawing down financial assets or increasing borrowing to protect key public capital spending.
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