## Global Developments: Implications for the Caucasus and Central Asia Region

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**Canonical URL:** [Global Developments: Implications for the Caucasus and Central Asia Region](https://www.imf.org/-/media/files/publications/reo/mcd-cca/2018/may/english/cca0518-globaldevelopments.pdf)

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### Global growth and outlook
- Global growth continued to strengthen in the second half of 2017 and is now estimated at 3.8 percent for the full year, the highest level since 2011 and 0.2 percentage point stronger than forecast in the October 2017 World Economic Outlook.
- Growth is projected to strengthen to 3.9 percent in 2018 and 2019, also 0.2 percentage point higher than anticipated in October.
- Russia returned to positive growth in 2017 and is projected to expand by 1.7 percent in 2018 (slightly higher than projected in October), before moderating to 1.5 percent in 2019.
- The region should benefit from a marginal strengthening of the outlook for China, a key partner for the region.
- Monetary policy normalization in advanced economies implies higher interest rates, which could tighten credit conditions in the CCA region.

### Risks to the global outlook
- Near-term risks are broadly balanced; medium-term risks are skewed to the downside.
- Specific risks highlighted:
  - A rapid tightening of global financial conditions.
  - Escalating import tariffs or a shift toward inward-looking policies, which could harm international trade, reduce global growth, and dampen commodity prices.

### Oil prices and implications
- The outlook for oil prices remains highly uncertain, largely reflecting supply-side uncertainty.
- Oil prices rose strongly in the second half of 2017, rising above $65 a barrel in January, supported by:
  - improved global growth outlook,
  - extension of the OPEC+ agreement limiting oil production through the end of 2018,
  - unplanned outages,
  - geopolitical tensions.
- More recently, rapidly rising US shale production has caused the price of oil to edge down.
- Oil price assumptions for 2018 and 2019 have been revised upward relative to the October 2017 Regional Economic Outlook: Middle East and Central Asia, but the medium-term outlook for oil prices remains subdued.

### APSP and market indicators (figure notes)
- APSP = average price of spot prices (the average of UK Brent, Dubai Fateh, and West Texas Intermediate crude oil prices).
- Figure elements described:
  - APSP spot price
  - WEO current APSP projection
  - WEO Oct. 17 APSP projection
  - S&P 500 index (RHS)

### Real GDP growth, 2016–19 (as reported)
- World: 2016 = 3.2; 2017 = 3.8; 2018 = 3.9; 2019 = 3.9
- CCA: 2016 = 2.5; 2017 = 4.1; 2018 = 3.7; 2019 = 3.9
- CCA Oil and Gas Exporters: 2016 = 2.4; 2017 = 3.9; 2018 = 3.7; 2019 = 3.8
  - Of Which: Non-Oil GDP Growth: 2016 = 1.2; 2017 = 3.6; 2018 = 3.8; 2019 = 3.6
- CCA Oil and Gas Importers: 2016 = 3.4; 2017 = 5.9; 2018 = 3.9; 2019 = 4.3

*Middle East and Central Asia Department — REO Update, May 2018*

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_Source: https://www.imf.org/-/media/files/publications/reo/mcd-cca/2018/may/english/cca0518-globaldevelopments.pdf_