## CCA Region Highlights

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**Canonical URL:** [CCA Region Highlights](https://www.imf.org/-/media/files/publications/reo/mcd-cca/2016/october/cca1016hi.pdf)

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### Overview: Growth and External Shocks
- The CCA region has been hit by large and persistent external shocks since 2014, particularly the slump in commodity prices and slowdown in its key economic partners (mainly Russia and China).
- Regional growth is projected to average 1.3 percent this year.
- Next year, the region’s economies should turn a corner, with average growth picking up to 2.6 percent.
- Medium-term prospects are weak, with growth projected to average 4 percent in 2018–21, half that in 2000–14.
- Under this scenario, the gains that have been made in living standards since independence, vis-à-vis emerging markets, would be partly reversed.

### Shocks Mitigated, Vulnerabilities Heightened
- Fiscal accommodation, along with currency adjustment, has helped the CCA mitigate the impact of the external shocks.
- Amid weakening revenues, increased public spending has widened budget deficits by some 6.3 percentage points of GDP on average since 2014.
- With financial assets being drawn down and public debt rising, policy space has declined.
- Fiscal policy needs to:
  - strike a balance between supporting growth in the short term and ensuring debt sustainability, intergenerational equity, and precautionary savings over the longer term;
  - prioritize pro-growth capital spending and safeguard social expenditures;
  - consolidate fiscal positions in the context of credible medium-term plans.
- Currency adjustment has supported competitiveness but temporarily raised inflation and, amid weakening growth, contributed to the buildup of vulnerabilities in the highly dollarized financial sectors.
- With many countries opting for more exchange rate flexibility, the need to strengthen monetary policy frameworks has become a priority.
- Complementary steps to contain risks to financial stability and intermediation include:
  - capital injections;
  - restructuring and closing of troubled banks;
  - revamping of lending practices;
  - strengthening of financial surveillance and macroprudential and crisis management frameworks.

### Structural Transformation Needed
- Most CCA countries made rapid gains in living standards in the two decades following their independence; these gains have lost momentum amid weak productivity growth and deceleration of investment.
- Structural transformation to diversify away from reliance on commodities and remittances is imperative to improve medium-term prospects, create jobs, and raise living standards.
- Many countries have drawn up diversification and privatization plans; decisive actions are now needed to implement them.
- Policy focus areas could include:
  - improving governance, accountability, and property rights;
  - enhancing financial intermediation;
  - making growth more inclusive so the broader population benefits from higher living standards.
- The CCA lags behind its emerging market peers in governance, accountability, property rights, and financial intermediation.

### CCA Region: Selected Economic Indicators, 2000–17 (Percent of GDP, unless otherwise indicated)
- Notes: Projections refer to 2016 and 2017 columns as presented. CCA oil and gas exporters: Azerbaijan, Kazakhstan, Turkmenistan, and Uzbekistan. CCA oil and gas importers: Armenia, Georgia, the Kyrgyz Republic, and Tajikistan.

- CCA (Real GDP annual growth)
  - Average 2000–14: 8.7
  - 2012: 6.6
  - 2013: 5.3
  - 2014: 3.2
  - 2015: 1.3
  - 2016: 2.6
  - 2017: (listed under Projections) 2.6

- CCA (Current Account Balance)
  - Average 2000–14: 1.5
  - 2012: 2.1
  - 2013: 2.0
  - 2014: –3.0
  - 2015: –4.1
  - 2016: –2.8

- CCA (Overall Fiscal Balance)
  - Average 2000–14: 2.7
  - 2012: 2.7
  - 2013: 1.5
  - 2014: –4.6
  - 2015: –4.9
  - 2016: –3.0

- CCA (Inflation, p.a. annual growth)
  - Average 2000–14: 9.4
  - 2012: 6.1
  - 2013: 5.9
  - 2014: 6.2
  - 2015: 9.9
  - 2016: 8.3

- CCA Oil and Gas Exporters (Real GDP annual growth)
  - Average 2000–14: 9.0
  - 2012: 6.7
  - 2013: 5.3
  - 2014: 3.1
  - 2015: 1.0
  - 2016: 2.4

- CCA Oil and Gas Exporters (Current Account Balance)
  - Average 2000–14: 2.7
  - 2012: 2.8
  - 2013: 3.3
  - 2014: –2.4
  - 2015: –3.5
  - 2016: –2.0

- CCA Oil and Gas Exporters (Overall Fiscal Balance)
  - Average 2000–14: 3.4
  - 2012: 3.3
  - 2013: 1.9
  - 2014: –4.7
  - 2015: –4.8
  - 2016: –2.8

- CCA Oil and Gas Exporters (Inflation, p.a. annual growth)
  - Average 2000–14: 9.6
  - 2012: 6.4
  - 2013: 6.1
  - 2014: 6.4
  - 2015: 10.8
  - 2016: 8.7

- CCA Oil and Gas Importers (Real GDP annual growth)
  - Average 2000–14: 6.5
  - 2012: 5.7
  - 2013: 4.7
  - 2014: 3.7
  - 2015: 3.7
  - 2016: 4.1

- CCA Oil and Gas Importers (Current Account Balance)
  - Average 2000–14: –7.6
  - 2012: –4.8
  - 2013: –9.4
  - 2014: –7.9
  - 2015: –8.5
  - 2016: –8.8

- CCA Oil and Gas Importers (Overall Fiscal Balance)
  - Average 2000–14: –3.2
  - 2012: –2.5
  - 2013: –2.0
  - 2014: –3.6
  - 2015: –5.3
  - 2016: –4.4

- CCA Oil and Gas Importers (Inflation, p.a. annual growth)
  - Average 2000–14: 7.7
  - 2012: 3.6
  - 2013: 4.6
  - 2014: 4.8
  - 2015: 2.4
  - 2016: 4.9

_International Monetary Fund | October 2016_

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_Source: https://www.imf.org/-/media/files/publications/reo/mcd-cca/2016/october/cca1016hi.pdf_