ADB improves economic outlook for Central Asia

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BISHKEK (TCA) — The Asian Development Bank (ADB) forecasts that economic expansion in Developing Asia, including Central Asia, will accelerate to 6.0% in 2017 as stronger than expected exports and domestic consumption fuel growth.

In a supplement to its Asian Development Outlook Update 2017 report released on December 15, ADB upgrades its 2017 growth domestic product (GDP) outlook in the region by 0.1 percentage points compared to its September 2017 forecast while its 2018 forecast remains unchanged at 5.8%.

The economic outlook for Central Asia in 2017 has further improved with recovery in several countries driven by domestic and external factors alike. Growth in the subregion as a whole is now expected to reach 3.6% in 2017, higher than the 3.3% forecast in the Update, mainly reflecting a higher growth forecast for Kazakhstan, the subregion’s largest economy.

Azerbaijan and Kazakhstan are, as hydrocarbon exporters, profiting from the recent rise in oil prices. Azerbaijan should also benefit from increased public investment spending and the commencement of production from the Shah Deniz Stage 2 gas field in 2018.

In contrast, Uzbekistan is expecting slower growth in the remainder of 2017 and into 2018 following foreign exchange reform and devaluation in September 2017.

In Georgia and Tajikistan, growth is expected to come in slightly higher in 2017 than earlier forecast thanks to a benign external environment and continued strong public investment. The growth forecast for the subregion in 2018 remains unchanged at 3.9%, with lower growth in Uzbekistan expected to balance the improved outlook for Azerbaijan and Kazakhstan.

Kazakhstan enjoyed a strong economic upswing in the year to September, with GDP growth at 4.3% backed by solid expansion in industry and transport services. At the same time, growth drivers started to weaken somewhat in the third quarter of 2017. During the first 9 months of 2017, the biggest driver of growth was industry, which expanded by 8.3%, with extractive industries growing at 11.3% on double-digit growth in coal, crude oil, and metals. Manufacturing expanded by 5.7%. Agriculture, services, and construction grew moderately. Given the double-digit growth in extractive industries, GDP growth is now expected to reach 3.7% in 2017, significantly revised up from 2.7% forecast in the Update. Assuming higher oil prices in 2018 and further recovery in domestic demand, growth is likely to slow only a little in 2018, despite the higher base in 2017. The growth forecast for 2018 is raised to 3.3% from 3.0% in the Update.

Sergey Kwan

TCA