EFSD releases Regional Economic Review Summer 2025
YEREVAN, July 11. /ARKA/. The Eurasian Fund for Stabilization and Development (EFSD) has released the Regional Economic Review "Summer 2025.
According to the review, at the beginning of 2025, the economies of the countries of the region demonstrate multi-directional dynamics, due to both internal factors and external conditions. The fastest growth in the first quarter of 2025 was shown by Kyrgyzstan and Tajikistan, where GDP increased by 13.1% and 8.2% y/y, respectively.
This was facilitated by activity in the construction sector, stable domestic demand and the inflow of remittances from labor migrants. At the same time, the Russian economy entered a cooling phase: GDP growth slowed to 1.4% y/y, and industrial production declined.
Economic activity in Kazakhstan remains relatively stable (GDP +5.6% y/y), although quarterly dynamics indicate a slowdown after a sharp rise in Q4 2024.
Inflation processes in the region are unevenly developing. In Russia, inflation began to slow down, reaching 10.3% y/y in Q1, while in other countries, including Kazakhstan (11.3%) and Belarus (5.9%), price pressure is increasing. Relatively tight monetary policy is expected to remain in all countries of this group in the medium term.
The budget situation is generally stable. Budget surpluses were recorded in Armenia, Kazakhstan, Kyrgyzstan and Tajikistan, but in a number of countries there are risks to the budget revenue associated with one-off factors and a potential increase in spending on large-scale infrastructure projects.
There are mixed trends in foreign trade. The balance worsened in Russia and Armenia, but improved in Kyrgyzstan and Tajikistan due to lower imports and higher remittances. The Russian ruble temporarily strengthened amid a high key rate, but is expected to weaken by 2027, with similar trends forecast for the tenge.
In 2026–2027, the Russian economy is expected to cool down, with growth slowing to about 2%. The growth of the Belarusian economy will also slow significantly, to about 1%. At the same time, the economies of Central Asia are likely to maintain higher rates (5–7%).
Inflation will gradually decline, but will remain above target values in most countries. Key risks include dependence on commodity markets, reduced investment activity, inflationary pressure due to rising wages and tariffs, as well as overheating of economies fueled by lending and fiscal stimulus.
"Nevertheless, even if these risks materialize, we do not expect the formation of critical imbalances that pose a threat to macroeconomic and financial stability in our countries," the review says.
The EFSD Regional Economic Review has been published quarterly since 2024. Full versions are published in April and October, short updates in July and December. All issues are available on the fund's website.
The Eurasian Fund for Stabilization and Development (EFSD) is a regional financial mechanism with a volume of over US$9 billion, which was established in 2009 by the Republic of Armenia, the Republic of Belarus, the Republic of Kazakhstan, the Kyrgyz Republic, the Russian Federation and the Republic of Tajikistan. The objectives of the EFSD are to promote economic and financial stability in the Fund's member states, as well as to support their sustainable development.-0-
