Finance

Finance

Economic growth is projected to halve in countries which have tight linkages with Russia - World Bank

08 June 2022 11:09 (UTC +04:00)

In ECA countries outside Eastern Europe, growth is expected to be weakened in most countries in Central Asia and the South Caucasus because of tight economic linkages with the Russian economy, APA-Economics reports citing the June edition of "Global Economic Prospects" report of the World Bank.

In both subregions, growth is projected to about halve in 2022 from 2021, falling to 2.4 percent in Central Asia and 3.4 percent in the South Caucasus.

Although higher global commodity prices should provide windfalls that help cushion activity in some economies (Azerbaijan, Kazakhstan, Uzbekistan), these benefits are likely to be limited. An important reason is supply constraints, with the oil sector already operating close to capacity in Azerbaijan and an earlier disruption to a major pipeline in Kazakhstan.

More broadly, sharp reductions in external demand and remittances from Russia are likely to form a larger drag on some of these economies than the gains from higher commodity prices.