Economic growth in Central Asia and the Caucasus will remain relatively sluggish for at least the next 18 months, according to a new report issued by the Asian Development Bank.
An Outlook Supplement, issued by the ADB on July 12, cited lower energy prices and the ongoing economic struggles of some European Union states as factors hampering the economies of Central Asia and the Caucasus. The ADB downwardly revised its projection for 2012 growth in Central Asia to 5.8 percent from a 6.1 percent expansion predicted at the outset of the year. The ADB’s regional growth projection for 2013 – 6.2 percent – remained unchanged.
The ADB report defined the Central Asia region as encompassing Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan and Uzbekistan, as well as the Caucasus states of Azerbaijan, Armenia and Georgia.
Growth rates in individual countries vary widely. The bank noted that growth in Kazakhstan, Central Asia’s strongest performer, moderated from 8.3 percent in the last quarter of 2011 to 5.5 percent in the first quarter of 2012. In neighboring Kyrgyzstan, a significant drop in gold production undermined the overall growth rate.
“Some of the slowdown was due to weaker growth in Europe and the People’s Republic of China —key markets for the sub-region’s exports. The slowdown in export growth also contributed to stagnant industrial production,” the ADB report stated.
“Falling oil prices will result in lower government revenues, which could partially be offset by drawing on oil windfall funds to fuel government expenditures,” the report added. “Strong public spending growth, development of a new oil field in Kazakhstan and the expansion of a new gas pipeline network in Turkmenistan should help support growth in the sub-region.”
Meanwhile, the ADB predicted that inflation in Central Asia would remain steady, hitting 7.1 percent this year and 7.3 percent in 2013.
The ADB projections may paint only a partial economic picture in Central Asia. While Turkmen energy exports, statistically speaking, may bolster Central Asia’s overall economic performance, economic uncertainty for Turkmen citizens appears to be growing. This is underscored by the recent, massive hike in the cost of bread and flour.