Eurasian Development Bank: Armenia projected to see economic growth at 4.2% in 2023

YEREVAN, December 15, /ARKA/. The Eurasian Development Bank (EDB) says in its latest Macroeconomic Review that the economies of its six member states have demonstrated fairly high resilience and adaptability to external economic shocks.

The Macroeconomic Review notes that, overall, the adverse global trends associated with weaker business activity and higher inflation have so far had a very limited impact on the EDB region’s economic performance.

EDB analysts believe that Russia’s GDP decline this year will most probably be under 3%, while Belarus’s recession will be around 4.6%, much better than the spring forecasts. Kazakhstan has maintained strong economic growth. Business activity in Armenia, Kyrgyzstan and Tajikistan has expanded rapidly, driven by new incentives, including labor and financial inflows.

The review also notes that Russia and Belarus’s GDPs in 2023–2024 are likely to maintain an L-shaped trajectory, with a significant decline to be followed by a slow and gradual recovery. Reconfiguring supply chains quickly remains a challenge, infrastructure constraints are still in place, fiscal incentives may weaken, and restrictions on technology imports may have lasting negative effects. While Bank analysts project Belarus’s GDP to begin recovery as early as 2023, with a 0.3% growth, for Russia it is expected to start in 2024. Due to new shocks, primarily the EU embargo on Russian oil and oil products, Russia’s GDP could fall by 2% in 2023.

For the Central Asian region and Armenia, EDB analysts project continued high economic growth next year. The baseline scenario for Kazakhstan expects GDP growth of 4.2% in 2023. Government measures to support the economy, as well as expanded oil production capacity, will offset the impact of the negative external environment. Armenia is projected to see moderate economic growth in 2023, at 4.2%, as the momentum from labor and business relocations to the country wanes. GDP growth in Kyrgyzstan and Tajikistan is forecast at 3.7% and 6.5%, respectively.

EDB analysts note that the baseline forecast is one of the region’s possible economic developments. Because of high uncertainty, these could be more positive or negative. A prolonged and deep recession in the world’s major economies should not be ruled out. For now, the baseline scenario projects a moderate recession (around 1% of GDP) in the U.S. and the eurozone in 2023. However, if the worst-case scenario materializes, economic activity in the Bank’s member countries next year will be weaker than projected in the base case.

The Eurasian Development Bank (EDB) is an international financial institution investing in Eurasia. For more than 16 years, the Bank has worked to strengthen and expand economic ties and foster comprehensive development in its member countries. The EDB's charter capital totals US $7 billion. Its portfolio consists principally 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. -0-