(Read the full report on ebrd.com)

The European Bank for Reconstruction and Development (EBRD) revised up its outlook for the economies of the South Caucasus and Central Asia in 2021, predicting that growth would be stronger than it initially expected, though it warned a slow pace of  vaccinations left the recovery vulnerable to an autumn COVID-19 wave.

The economies of Eastern Europe and the Caucasus (Azerbaijan, Armenia, Belarus, Georgia, Moldova, and Ukraine) are expected to grow 2.8 percent in 2021 as lockdowns are lifted and demand for exports remains strong. Higher commodity prices support the recovery in commodity exporters, the EBRD said. For the current year, this is 0.2 percentage points better than expected. In 2022, it predicts growth will accelerate further to 3 percent, though this is 1.1 percentage points worse that its initial predictions.

“A slow rate of vaccination and the possibility of a new COVID-19 wave in the autumn constitute risks to the outlook,” the EBRD said in its Regional Economic Prospects report. “Political volatility and slowdown of reforms pose additional risks in some countries.”

The outlook for economies in Central Asia was also revised up, though the expectations for recovery are far from uniform. The region is expected to grow by 4.5 percent in 2021 and 2022, reflecting higher commodity prices, which benefit
commodity exporters, as well as recovering remittances. The EBRD’s previous report was published in September 2020.

“Assuming the pandemic is brought under control, Central Asian economies are on track to achieving high growth rates in 2021 and continuing on a path of recovery in 2022,” the EBRD said.

Considering the situation separately by region and country, the average growth rates in the states of Central Asia (Kazakhstan, Kyrgyzstan, Mongolia, Tajikistan, Turkmenistan, and Uzbekistan) in 2021 and 2022 will be 4.5 percent each. This is 1.3 and 3.7 percentage points higher than in the previous report.

Below are the main forecasts by country:

ARMENIA

GDP growth is projected to recover partially in 2021 to 4 percent and more strongly in 2022 – 5 percent.

AZERBAIJAN

Azerbaijan’s economic growth is projected at 2 percent and 2.5 percent in 2022.

BELARUS

GDP growth is projected to recover to 0.5 percent in 2021 and the same level in 2022.

GEORGIA

Georgia’s economy is projected to recover in 2021, growing by 4.5 percent and 5.5 percent in 2022.

KAZAKHSTAN

Economic growth is expected to rebound in 2021 – the economy is expected to grow 3.6 percent followed by 3.8 percent growth in 2022.

MOLDOVA

Moldova’s economy is projected to expand by 4.5 percent in 2021 and 4 percent next year.

UZBEKISTAN

GDP growth is projected to recover to 5.6 percent in 2021 and to grow further by 6.0 percent next year.

UKRAINE

Ukraine’s economy is expected to expand by 3.5 percent this year and at the same level in 2022.

In Kyrgyzstan GDP is expected to grow by 6.6 percent in 2021 and 3.6 percent in 2022. In Tajikistan – 6.5 percent in 2021 and 6 percent in 2022. In Turkmenistan – 4.6 percent in 2021 and 3.5 percent in 2022.