## IMF Survey: Caucasus, Central Asia Feel Crisis Impact, But Set for Modest Upturn

_IMF News, October 3, 2009_

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## Bibliographic details
- Published: October 3, 2009

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### Regional growth shock and outlook
- Growth for the Caucasus and Central Asia (CCA) region projected to drop from 6.6 percent in 2008 to 1.5 percent in 2009.
- The region as a whole expected to see a modest recovery in 2010, though energy importing low-income countries are expected to face a difficult year ahead.
- The IMF will release a detailed forecast, Regional Economic Outlook: Middle East and Central Asia, on October 11.

### Divergent prospects: energy exporters vs. importers
- Per capita GDP ranges from US$795 in Tajikistan to US$8,500 in Kazakhstan.
- Half the region’s countries are energy exporters: Azerbaijan, Kazakhstan, Turkmenistan, and Uzbekistan.
- Energy exporters
  - Most projected to record solid growth in 2009 owing to long-term energy export contracts, supportive policies, and in some cases limited linkages to international markets.
  - Kazakhstan is an exception: in the midst of a banking crisis and hit by lower oil prices, likely to see GDP contract by about 2 percent in 2009; recovery in 2010 held back by lingering problems in the banking system.
  - Azerbaijan, Turkmenistan, and Uzbekistan projected to register robust growth in 2009, supported mainly by public spending made possible by ample public savings accumulated during the boom years; with global energy demand increasing again, these countries are expected to grow strongly in 2010, according to IMF projections.
- Energy importers
  - Armenia, Georgia, the Kyrgyz Republic, and Tajikistan are energy importers and face a marked slowdown in growth and deteriorating living standards mainly due to a sharp drop in remittances from Russia.
  - Armenia likely to suffer a contraction of more than 15 percent in 2009, following a strong construction boom and exceptionally fast growth in recent years.
  - Georgia seriously hit by the slowdown in foreign direct investment.
  - The Kyrgyz Republic and Tajikistan faring better, helped by bumper harvests.

### Policy responses and external assistance
- CCA policymakers have eased fiscal and monetary policies and strengthened social safety nets; the international community has provided assistance, and additional donor support will be needed for some countries.
- Donor support examples:
  - IMF assistance through the concessional Poverty Reduction and Growth Facility (Tajikistan) and under the IMF’s Exogenous Shocks Facility (the Kyrgyz Republic).
  - Armenia and Georgia both have IMF Stand-By Arrangements.
  - Donors including neighboring Russia and China and the World Bank have stepped in to help CCA’s energy importers weather the crisis.
- Role of official support: critical to help countries implement countercyclical fiscal policies and bring about a gradual recovery for energy importers in 2010.

### Financial sector vulnerabilities and exchange rate stance
- Financial sectors across the region are under stress, notably in Kazakhstan; restoring financial health is a priority.
- Recommended actions:
  - Close monitoring of CCA financial systems.
  - Enhanced supervision and crisis preparedness.
- Exchange rate policy:
  - Countries should continue to preserve exchange rate flexibility or move towards flexible exchange rate regimes over time to maintain competitiveness and discourage speculative capital flows.

### Policy recommendations and priorities
- Continue fiscal policies that support growth while keeping social protection a priority.
- Energy importers need additional donor support on concessional terms to prevent a buildup of unsustainable debt levels.
- Energy exporters should use part of anticipated revenue gains from rising energy prices to push ahead with structural reforms.
- Restore financial sector health through monitoring, enhanced supervision, and crisis preparedness.

*IMF Survey online, October 3, 2009 — IMF Survey: Caucasus, Central Asia Feel Crisis Impact, But Set for Modest Upturn*

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## Content in this bundle

- [Car100209aapdf (PDF)](/-/media/websites/imf/imported/external/arabic/pubs/ft/survey/so/2009/car100209aapdf.pdf){rel="external" type="application/pdf"}
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## References

- [https://www.imf.org/en/News/country-focus](https://www.imf.org/en/News/country-focus)
- [PRESS CENTER](http://presscenter.imf.org/)
- [IMF Country Focus](https://www.imf.org/en/news/country-focus)
- [Read the research](https://www.imf.org/external/pubs/ft/reo/2009/MCD/eng/mreo1009.htm)
- [Press release](https://www.imf.org/external/np/sec/pr/2009/pr09338.htm)
- [IMF boosts support to CCA](https://www.imf.org/external/pubs/ft/survey/so/2009/CAR062209A.htm)
- [IMF chief visits Central Asia](https://www.imf.org/external/pubs/ft/survey/so/2009/NEW061209A.htm)
- [Global recovery under way](https://www.imf.org/external/pubs/ft/survey/so/2009/RES100109A.htm)
- [World forecast](https://www.imf.org/external/pubs/ft/weo/2009/02/index.htm)
- [Tajikistan](https://www.imf.org/external/np/country/notes/tajikistan.htm)
- [the Kyrgyz Republic](https://www.imf.org/external/np/country/notes/kyrgyzrep.htm)
- [Armenia](https://www.imf.org/external/np/country/notes/armenia.htm)
- [Georgia](https://www.imf.org/external/np/country/notes/georgia.htm)
- [https://www.imf.org/en/home](https://www.imf.org/en/home)

_Source: https://www.imf.org/en/news/articles/2015/09/28/04/53/socar100209a_