## Caucasus and Central Asia Regional Economic Outlook, November, 2017

## Source details

**Canonical URL:** [Caucasus and Central Asia Regional Economic Outlook, November, 2017](https://www.imf.org/-/media/files/publications/reo/mcd-cca/2017/october/ccanovember1/presentations/cca-reo-october-2017-launch-presentation-for-website.pdf)

## Other formats

- [Markdown version](/-/media/files/publications/reo/mcd-cca/2017/october/ccanovember1/presentations/cca-reo-october-2017-launch-presentation-for-website.pdf.md)
- [Structured JSON version](/-/media/files/publications/reo/mcd-cca/2017/october/ccanovember1/presentations/cca-reo-october-2017-launch-presentation-for-website.pdf.json)

---

### Outlook, Opportunities, and Challenges
- Recovery continuing, but medium-term growth subdued.
- Growth strengthening in CCA’s main economic partners:
  - Euro Area GDP Growth: 1.0, 1.4, 1.8, 2.2, 2.6, 3.0 (percent change) — chart contrasts Current vs April 2017 WEO Update.
  - China GDP Growth: 5.0, 5.5, 6.0, 6.5, 7.0 (percent change) — chart contrasts Current vs April 2017 WEO Update.
- Commodity prices stabilizing, but outlook subdued:
  - Metal Price Index (2005=100) and Oil Price Assumptions (APSP, U.S. dollars a barrel) presented with Current and April 2017 WEO Update series.
- Window of opportunity driven by:
  - Improved economic conditions in main trading partners.
  - The Belt And Road Initiative: Six Economic Corridors spanning Asia, Europe, and Africa.
  - Uzbekistan reforms and fintech adoption.
- External risks and challenges:
  - Rapid tightening of global financial conditions.
  - Shift towards inward-looking policies.
  - Financial sector distress in some countries.
  - Slow implementation of structural reforms.

### Growth and External Accounts
- CCA growth expected to accelerate, but remain below historical norms:
  - Real GDP Growth series shown for Oil Exporters and Oil Importers for 2016, 2017, 2018, 2019–22 with breakdowns of Non-Oil Contribution and Oil Contribution.
  - Historical average 2000-10 used as benchmark.
- External deficits declining gradually, helped by exchange rate adjustment:
  - Current Account Deficits (Percent of GDP) series for 2014–2022 for Oil Exporters and Oil Importers.
  - Nominal Exchange Rates (US Dollars per national currency index, Jan-2010 = 100) time series from Jan-2010 through Jan-2017 for AZE, KAZ, TKM, UZB (Oil Exporters) and ARM, GEO, KGZ, TJK (Oil Importers).

### Fiscal Policy and Debt
- Fiscal consolidation should continue to ensure debt sustainability, but become more growth friendly.
- Fiscal Deficit and Public Debt for CCA (Percent of GDP):
  - Separate panels for Oil Exporters and Oil Importers showing Overall fiscal deficit, percent of GDP and Total government debt, percent of GDP (RHS).
  - Note: For Oil Exporters, the deficit for 2017 excludes a one-time fiscal transfer to the financial sector in Kazakhstan.

### Monetary Policy and Financial Sector
- Despite differences in the monetary stance, frameworks should be further strengthened:
  - Monetary Policy Rate (Percent) charts for Oil Exporters (AZE, KAZ) and Oil Importers (ARM, GEO, KGZ, TJK) with a 0 to 18 percent vertical scale.
- Financial sector vulnerabilities exposed:
  - Problem Loans (In percent of total loans) chart with 0 to 70 percent scale; official definition of NPLs noted.
  - Private Credit Growth (Percent, year over year) series for Azerbaijan, Kazakhstan, Tajikistan and for Armenia, Georgia, Kyrgyz Republic covering Jan-15 through Jan-17 with ranges shown (including negative growth values such as -40 to 40 in charts).
- Important steps have been taken to address vulnerabilities; further action needed:
  - Immediate priorities and policy responses include:
    - Diagnose the Problem.
    - Address Financial Stability Risks.
    - Enhance Prudential Regulation and Supervision.
    - Strengthen Banks’ Corporate Governance.
    - Macro Policies, Financial Support, Supervisory and Prudential Measures.

### Securing Higher and More Inclusive Growth
- Securing higher and more inclusive growth is critical to the CCA region:
  - Projected Labor Force Increase (Million of people, cumulative) chart and Labor Force in 2017 (estimate): CCA: 40 million.
  - Youth Unemployment Rate (average, percent) series comparing Oil Exporters, Oil Importers, and EM & LIDC (excluding CCA) with values spanning 12 to 30 percent on the chart.
- Multiple policy levers needed to spur higher and more inclusive growth:
  - Five Pillars of Inclusive Growth (presented as framework for action).
  - Structural reforms would support trade, leveraging better external conditions:
    - Trade Openness (Index 2000=100 of the sum of exports and imports as a percent of GDP in nominal terms) time series for EMDE, Oil Exporters, Oil Importers (2000–2016).
  - Fully capitalize on integration opportunities and adopt financial technology to boost growth and inclusiveness, while managing risks:
    - Adults (+15 years old) With Bank Account (Percent of the population, most recent value) compared across Oil Exporters and Oil Importers.

### Key Takeaways and Policy Recommendations
- Takeaways:
  - Recovery continuing, but medium-term growth subdued.
  - Window of opportunity: better external conditions; Belt and Road Initiative; Uzbekistan; fintech.
  - To capitalize on opportunity, countries need to take action:
    - More growth-friendly fiscal consolidation.
    - Stronger monetary policy frameworks.
    - Financial sector repair.
    - Structural reforms.
  - Bold action would secure higher, more inclusive growth.

### IMF’s Role
- IMF engagement in the region includes:
  - Policy Analysis.
  - Bilateral Engagement.
  - Capacity Development.
  - Regional Cooperation.
  - Examples of activities:
    - Monetary Policy Workshop, Joint Vienna Institute.
    - Peer-to-Peer Event, IMF Annual Meetings.

*Caucasus and Central Asia Regional Economic Outlook, November, 2017.*

---


_Source: https://www.imf.org/-/media/files/publications/reo/mcd-cca/2017/october/ccanovember1/presentations/cca-reo-october-2017-launch-presentation-for-website.pdf_