The International Monetary Fund warned on Friday of weak growth prospects in Central Asia and the Caucasus and called for active reforms to energize the post-Soviet economies.
In a report, the 189-nation IMF forecast economic growth in the region in 2016 at just 1.3 per cent, the lowest estimate since 1998. The slowdown is mostly due to low commodity prices that are weighing down energy exporters Azerbaijan, Kazakhstan, Turkmenistan and Uzbekistan.
Those economies are expected to grow at an overall rate of 1 per cent.Weaker growth by key economic partners Russia and China is also a factor. Energy importers Armenia, Georgia, Kyrgyzstan and Tajikistan are expected to grow 3.7 per cent, the same as last year.
Next year, regional growth is forecast at 2.6 per cent. While the IMF noted that the region is suffering from external factors that are outside its control, those trends have only increased the need for robust monetary, financial and structural reforms.
“Policymakers need to take important steps toward promoting strong and inclusive growth and job creation, much needed to preserve and improve living standards,” said Juha Kahkonen, deputy director of the IMF’s Middle East and Central Asia Department.
“The protracted nature of these shocks underlines the pressing need to diversify those economies away from their dependence on remittances and commodity exports, so they can more effectively cope with the kinds of economic challenges they’re currently facing,” Kakhkonen said.
The fund urged regional governments to direct federal spending to education, training and health care in order to fuel economic growth. It also stressed the importance of good governance, accountably and property rights.
“The success of these measures will allow the region to enjoy more sustained and inclusive growth, which will improve living standards and lower poverty rates,” Kahkonen said.
Earlier this month, global finance leaders complained that “growth has been too low for too long, benefiting too few,” and warned that a backlash against globalization was on the rise.