Aggregate GDP of EDB states down 3% in 2020 amid COVID-19 pandemic - EDB Survey
<p> MINSK, Mar 29 - PrimePress. The aggregate gross domestic product (GDP) of the Eurasian Development Bank member-countries (EDB: Armenia, Belarus, Kazakhstan, Kyrgyzstan, Russia and Tajikistan) declined by 3% in 2020 amid the COVID-19 pandemic, after a 2.3% growth in 2019, says the EDB analytical survey posted on the official website of the bank. </p> <p> </p> <p> The EDB estimates that the 3% decline in aggregate GDP of the bank’s member countries in 2020 reflects a decline in economic activity in all the states in the EDB region. “Weakening domestic and external demand, falling prices for energy commodities, deteriorating business sentiment and transport constraints led to the decline in business activity,” the survey said. </p> <p> </p> <p> “Inflation in EDB member countries accelerated temporarily in late 2020 – early 2021 above the target rates. This was mainly due to the significant global rise in food prices and the depreciation of the national currencies. Because of these factors, inflation in the Bank’s region of operations remained high at the start of 2021. Supply chain disruptions due to the pandemic and the cost of anti-epidemic interventions have exerted additional pressure on prices. When the pandemic subsides, the pro-inflationary effects from global food prices and supply chain disruptions will lessen, leading to a slowdown in inflation in the second half of the year.” </p> <p> </p> <p> The cycles of interest rate cuts in EDB member countries that supported the economies throughout 2020 have ended because of rising inflation risks. </p> <p> </p> <p> At the same time, EDB experts note that the anti-crisis measures taken by the state to support private households and businesses have helped avoid large-scale shocks in the region, including stabilisation of labour markets: "The main focus has been on strengthening national health systems, supporting household incomes, and helping small and medium-sized businesses, which have been hit hardest by the pandemic". </p> <p> </p> <p> According to EDB estimates, the volume of anti-crisis measures to support the economy in 2020 in Kazakhstan was 8.7% of GDP and compensation for GDP losses was 2-3%; in Russia - 4.5% and 2%; in Armenia - 3.8% and 1.8-2.2%; in Tajikistan - 2.5% and 0.4-1.2%; in Kyrgyzstan - 2.4% and 0.5-1%; in Belarus - 1.4% and 0.2-0.7% respectively. </p> <p> </p> <p> Potential economic growth rates in most of the region’s countries fell by 0.5–1 p.p. compared to pre-pandemic levels. This was due to the pandemic’s negative impact on investment, innovation, and labour resources. In the medium term, government development programmes can be a key factor in restoring GDP growth rates in the region. </p> <p> </p> <p> Services suffered significant losses from the pandemic but retain the potential for active recovery when restrictions are eased. Lower consumer demand and social distancing measures have caused a deep decline in retail, hospitality, as well as professional, cultural, and entertainment services. </p> <p> </p> <p> Mineral extraction has shrunk due to lower global demand, falling hydrocarbon prices, and the OPEC+ agreement to reduce oil production. A gradual increase in demand and improvements in the market environment will help the extractive industries to recover in the medium term. </p> <p> </p> <p> The manufacturing industries have adapted to pandemic challenges in most EDB countries. The production of food, chemicals, pharmaceuticals, machinery, and electrical equipment has shown a strong dynamic. Manufacturing has been much less affected by the pandemic compared to services, partly because of softer restrictions on businesses. </p> <p> </p> <p> The deep recession in the transport sector was caused by supply chain disruptions and restrictions on cross-border movements. </p> <p> </p> <p> EDB analysts also believe that a progressive strengthening of demand, the removal of restrictions on cross-border movements and improved market conditions will support a recovery in the mining and transport sectors in the medium term. End </p>
2021-03-30
Primepress
Aggregate GDP of EDB states down 3% in 2020 amid COVID-19 pandemic - EDB Survey
MINSK, Mar 29 - PrimePress. The aggregate gross domestic product (GDP) of the Eurasian Development Bank member-countries (EDB: Armenia, Belarus, Kazakhstan, Kyrgyzstan, Russia and Tajikistan) declined by 3% in 2020 amid the COVID-19 pandemic, after a 2.3% growth in 2019, says the EDB analytical survey posted on the official website of the bank.
The EDB estimates that the 3% decline in aggregate GDP of the bank’s member countries in 2020 reflects a decline in economic activity in all the states in the EDB region. “Weakening domestic and external demand, falling prices for energy commodities, deteriorating business sentiment and transport constraints led to the decline in business activity,” the survey said.
“Inflation in EDB member countries accelerated temporarily in late 2020 – early 2021 above the target rates. This was mainly due to the significant global rise in food prices and the depreciation of the national currencies. Because of these factors, inflation in the Bank’s region of operations remained high at the start of 2021. Supply chain disruptions due to the pandemic and the cost of anti-epidemic interventions have exerted additional pressure on prices. When the pandemic subsides, the pro-inflationary effects from global food prices and supply chain disruptions will lessen, leading to a slowdown in inflation in the second half of the year.”
The cycles of interest rate cuts in EDB member countries that supported the economies throughout 2020 have ended because of rising inflation risks.
At the same time, EDB experts note that the anti-crisis measures taken by the state to support private households and businesses have helped avoid large-scale shocks in the region, including stabilisation of labour markets: "The main focus has been on strengthening national health systems, supporting household incomes, and helping small and medium-sized businesses, which have been hit hardest by the pandemic".
According to EDB estimates, the volume of anti-crisis measures to support the economy in 2020 in Kazakhstan was 8.7% of GDP and compensation for GDP losses was 2-3%; in Russia - 4.5% and 2%; in Armenia - 3.8% and 1.8-2.2%; in Tajikistan - 2.5% and 0.4-1.2%; in Kyrgyzstan - 2.4% and 0.5-1%; in Belarus - 1.4% and 0.2-0.7% respectively.
Potential economic growth rates in most of the region’s countries fell by 0.5–1 p.p. compared to pre-pandemic levels. This was due to the pandemic’s negative impact on investment, innovation, and labour resources. In the medium term, government development programmes can be a key factor in restoring GDP growth rates in the region.
Services suffered significant losses from the pandemic but retain the potential for active recovery when restrictions are eased. Lower consumer demand and social distancing measures have caused a deep decline in retail, hospitality, as well as professional, cultural, and entertainment services.
Mineral extraction has shrunk due to lower global demand, falling hydrocarbon prices, and the OPEC+ agreement to reduce oil production. A gradual increase in demand and improvements in the market environment will help the extractive industries to recover in the medium term.
The manufacturing industries have adapted to pandemic challenges in most EDB countries. The production of food, chemicals, pharmaceuticals, machinery, and electrical equipment has shown a strong dynamic. Manufacturing has been much less affected by the pandemic compared to services, partly because of softer restrictions on businesses.
The deep recession in the transport sector was caused by supply chain disruptions and restrictions on cross-border movements.
EDB analysts also believe that a progressive strengthening of demand, the removal of restrictions on cross-border movements and improved market conditions will support a recovery in the mining and transport sectors in the medium term. End