Weathering Economic Storms in Central Asia
Russia's war against Ukraine and the international sanctions introduced against the former have had an unexpectedly mild impact on Central Asia, despite the region's deep economic dependence on its northern neighbour. Notwithstanding high inflation, the five Central Asian states - Kazakhst...
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| Autor Corporativo: | |
| Formato: | Libro electrónico |
| Idioma: | Inglés |
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Paris :
Organization for Economic Cooperation & Development
2022.
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| Edición: | 1st ed |
| Materias: | |
| Ver en Biblioteca Universitat Ramon Llull: | https://discovery.url.edu/permalink/34CSUC_URL/1im36ta/alma991009707511806719 |
Tabla de Contenidos:
- Intro
- Foreword
- Acknowledgments
- Table of contents
- Executive summary
- Central Asia has so far withstood the shock created by the war in Ukraine
- However, the region's medium-term outlook remains fragile
- Policy options for Central Asia to further advance their private sector development agenda in uncertain times
- Introduction
- Central Asian economies are closely integrated with Russia
- Trade linkages
- Financial sector
- Foreign Direct Investment
- People: labour migration and remittances
- The impact of international economic sanctions on the Russian economy has so far been less severe than initially anticipated
- International sanctions led by the European Union and the United States aim at pressuring Russia to end the war
- The Russian economy is contracting, yet is proving more resilient than initially expected
- Economies of Central Asia seem to have withstood the shock created by the sanctions
- GDP continued to grow across Central Asia in the first half of the year
- The main engines of growth have not yet been negatively affected
- Remittances have continued to support consumption across the region
- The increase in energy prices has benefitted commodity exporters in the region
- Rising inflation is weighing negatively on firms and households
- The trade channel has remained robust across Central Asia, but the region's close ties with Russia leave it vulnerable to political and supply risks
- Trade has remained dynamic in Central Asia, but suspicions of shadow trade with Russia might expose the region's economies to secondary sanctions
- However, supply-chain disruptions are affecting some industries and likely to increase the costs of trade
- Greater uncertainty might reduce Central Asia's investment attractiveness.
- An influx of highly skilled workers might support raising the human capital profile of selected labour markets across the region
- The longer-term impacts of the war might exacerbate fiscal imbalances across Central Asia
- Central Asian governments are still dealing with the consequences of the pandemic
- A fragile post-COVID recovery has not allowed governments to regain fiscal space
- So far, sustained consumption has supported government revenues
- However, in the longer run, financial market developments might weigh negatively on the sustainability of public finances
- In the longer run, the disentangling of Central Asia's economic relations with Russia might accelerate China's economic presence in the region
- Central Asia could benefit from a rethinking of China's regional trade strategy
- However, Central Asia's debt exposure to China could increase amidst tightening global financial conditions
- Policy responses in Central Asia
- Monetary policy across Central Asia has proved effective in stabilising exchanges rates, but high inflation remains an issue
- Windfall revenues have provided support to individuals and businesses
- Central Asian countries have sought to diversify trade routes
- Policy options for Central Asia
- Supportive fiscal policies can offset some of the negative economic effects, but should be handled with caution to keep debt and inflation levels in check
- Provide targeted, temporary support to households to ease the impact of price increases
- Provide targeted and temporary support to businesses to help them weather supply chain disruptions, liquidity constraints and increased debt servicing costs
- Refrain from protectionist policies to ensure trade and agriculture keeps flowing.
- In the longer term, the foreseeable reduced economic weight of Russia requires Central Asia to diversify trade and investment relationships
- Seize the opportunity to reinforce integration into regional and global supply and value chains
- Improve the overall business environment to increase the region's longer-term growth prospects and attractiveness
- Building resilient and inclusive economies can support this agenda
- Seize the opportunity to advance the region's green transition
- Capitalise on highly skilled human capital flocking into the region
- References.
