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In September, there was a recovery in economic activity in the EDB region of operations

10.11.2020 201 просмотров

In September 2020, the economies of most EDB member states continued to recover from the downturn caused by the coronavirus pandemic. 


The realization of pent-up demand after the easing of sanitary restrictions resulted in a noticeable recovery in the consumption of services. This process is supported by the expansionary monetary and fiscal policies pursued by the authorities of most countries in the region. However, economic activity continued to be low. In general, its decline in January-September 2020 is estimated at 6.6% y/y in Armenia, 1.3 - in Belarus, 2.8 - in Kazakhstan, 3.5 - in Russia, 6% y/y — in Kyrgyzstan. In Tajikistan, economic growth slowed to 4.2% y/y in January-September (after 7% in 2019 as a whole).

Pressure on the exchange rates of the Bank's member countries increased in late October - early November current year. The rise in global COVID-19 cases and the tightening of restrictive measures in European countries have increased the uncertainty about the prospects for a recovery in global economic activity, which has resulted in a decrease in demand for emerging market assets. According to EDB estimates, at the moment most of the national currencies of the Bank's member states are undervalued against the US dollar and the euro, but the space for their strengthening this year is limited due to increased risks, including geopolitical ones.

Weakening national currencies led to an acceleration in consumer price growth in most countries of the region. In particular, in October, inflation accelerated from 7 to 7.1% in Kazakhstan and from 3.7 to 4.0% in Russia. Restrained demand contributes to limiting price growth, the disinflationary impact of which may increase at the end of the year due to a slowdown in the recovery of economic activity in the region. regarding further easing of interest rate policy. Its nature in most countries in the Bank's region of operations provides support to economies during the pandemic and contributes to creating conditions for their gradual recovery as it slows down.

In October - early November, the risks of slowing down the economic recovery process in the EDB member countries increased . The increase in the intensity of the spread of COVID-19 is leading to increased social distancing measures and is likely to translate into increased social distancing both abroad and in the countries of the Bank's region of operations. Under these conditions, economic activity in the EDB member countries may decline in the fourth quarter of 2020. Its weakening in the largest economies of the region in October is indicated by the dynamics of composite PMI: in Russia, the indicator fell to 47.1 points from 53.7 a month earlier, and in Kazakhstan - to 49.7 from 52.8. In general, the uncertainty of economic development prospects remains high. In EDB's baseline scenario, the recovery of the region's economies is projected in 2021-2022, however, it may be uneven due to the limited potential for fiscal and monetary stimulus and structural features.

in the EDB region of operations. However, the situation changed in October - early November. The development of the pandemic and the strengthening of restrictive measures lead to a weakening of consumer and investment demand. In this regard, it is important not to abandon state support measures, while continuing to limit the negative social and economic consequences of the pandemic. In 2021, the agenda will include the task of entering a sustainable growth trajectory while maintaining macroeconomic stability and debt sustainability,” said EDB Chief Economist Evgeny Vinokurov.

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