The Asian Development Bank (ADB) told resource-rich ex-Soviet countries to expand economic diversification to make their economies less dependent on one export sector to become more resilient.

A drop in global demand due to the pandemic hit oil markets hard, forcing oil-producing countries in the OPEC+ group, of which Azerbaijan and Kazakhstan are members, to cut production to support global oil prices. This was a blow to Azerbaijan’s and Kazakhstan’s economies, which are traditionally reliant on oil and gas, while the COVID-19 restrictions also hurt other industries, leading to a contraction in Gross Domestic Product (GDP) last year.

ADB said that challenges “underlined the need for economic diversification.”

It indicated the extent of trade disruption in many countries in developing Asia, including ex-Soviet states, in 2020, at the height of the pandemic. Particularly badly hit were the oil and gas exporting countries, which had to deal with low prices and plummeting demand for hydrocarbons globally as industrial activity, trade, and international travel tanked.

Azerbaijan’s exports contracted by 36.6 percent in 2020, the data showed. On the demand side, in 2020, imports declined by 11.1 percent, compared with import growth of 3.5 percent in 2019.

The South Caucasus country’s economy as a whole reversed 2.5 percent growth in 2019 to contract by 4.3 percent in 2020.

ADB said that economic growth in Azerbaijan was forecast to return in 2021 at 1.9 percent and accelerate to 2.5 percent in 2022 as demand improves at home and abroad.

“As consumer confidence is restored and petroleum receipts become available for public investment, growth in the petroleum industry is expected to be outpaced by expansion in the rest of the economy,” the Bank said.

It said that gas-rich Turkmenistan experienced a similarly severe economic downturn in 2020. A dramatic decline in external demand and prices for hydrocarbons, which provide more than 80 percent of Turkmenistan’s exports and 30 percent of GDP meant exports were down by 24.2 percent in 2020. This is in marked contrast to the previous year when exports had been growing by 8.2 percent.

Neighboring Kazakhstan, another major oil producer, saw its exports dive by 19.4 percent during 2020.

In July, ADB revised Kazakhstan’s forecast for this year upwards to 3.4 percent from 3.2 percent. The country’s 2022 growth forecast is projected at 3.5 percent.

“The coronavirus disease pandemic has had a significant negative impact on global trade and supply chains, with many vulnerable economies in low-income countries being disproportionately affected. Although developing Asia’s trade recovered somewhat in the latter half of 2020, mainly due to China, the rebound was less pronounced in other economies in the region,” the ADB said.