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Transcript
Regional Economic Prospects May 2016
Modest pick-up
amid continued uncertainty
European Bank for Reconstruction and Development
May 2016
Key developments, outlook and risks
2
Average growth in the region to pick up modestly
from 0.5% in 2015 to 1.4% in 2016; 2.5% in 2017
At the same time, outlook for 2016 has weakened slightly since November 2015
3
Source: IMF WEO; EBRD forecasts
Divergent trends driven partly by external
factors



Modest global growth and weak Eurozone growth constrain external demand
Low commodity prices and continued recession in Russia are weighing on the
outlook for Central Asia, Eastern Europe and the Caucasus (EEC)
US monetary tightening led to lower capital inflows to the region, while ECB
QE program supports growth in CEB, SEE
4
Source: IMF WEO; EBRD forecasts
Oil prices have recovered somewhat from
January lows
But are lower than at the time of the previous REP forecasts
5
Source: Bloomberg
Currencies of major oil exporters adjusted,
broadly preserving local currency price of oil
6
Source: Bloomberg
Russia remains a leading economic partner for
many economies in EEC and Central Asia
Even as the weight of China as an economic partner has been rising
7
Source: UN Comtrade; IMF; CBR; national authorities; EBRD calculations
Capital flows to the region declined as the US
Fed started tightening monetary policy
Mirrored by lower inflows in emerging markets in general
8
Source: IIF; EBRD calculations
Accommodative ECB policies benefit CEB and
SEE in particular
ECB expanded QE, announced TLTRO II in March 2016
9
Source: European Central Bank; Bloomberg
Credit growth has slowed down markedly in
EEC and Central Asia, as well as Turkey
10
Source: National authorities via CEIC; EBRD calculations
Risks and vulnerabilities

Geopolitical tensions in and around the region

A sharp deceleration in China’s growth

A prolonged weakness in commodity prices − exacerbating pressures on
Russia, as well as countries in Central Asia and Eastern Europe and the
Caucasus

Brexit vote sparking higher volatility in financial markets – with implications
for Central and south-eastern Europe in particular
11
Key country developments
12
Consumption supports growth in CEB and
SEE, owing in part to terms-of-trade gains
13
Source: EUROSTAT; EBRD calculations. Includes CEB, Romania and Bulgaria.
Following strong 2015 outcome due to one-off factors,
Turkey’s growth is projected to moderate to 3.2%
Current account deficit decreased on the back of lower energy import bill partly
offsetting lower non-FDI capital inflows
14
Source: National authorities via CEIC
In Russia, a drop in private consumption
is partly offset by import contraction
15
Source: National authorities via CEIC
Azerbaijan hit by oil price shock, but substantial
liquidity buffers cover 25 months of imports
16
Source: National authorities; IMF; EBRD estimates
Remittances to CA & EEC declined by 40% in
US$ terms – mostly due to exchange rates
 Near constant in roubles; down 20% in local currencies of recipient countries
 Downward trend continued in Q1 2016
17
Source: CBR; CEIC; Bloomberg and EBRD calculations
In Ukraine, marked improvement in twin deficits
 Combined government and Naftogaz deficit decreased to 3% of GDP
 Current account deficit of 9% of GDP in 2013 almost eliminated
18
Source: National authorities; IMF
Blows to tourism and poor export performance
weigh on growth in Egypt and Tunisia
19
Source: National authorities via CEIC and Haver, seasonally adjusted data for tourism.
Overall, growth is expected to pick up in 2016
but slightly less than projected in November
 Upward revisions mainly in SEE, CEB and Turkey;
 Downward revisions in EEC, Central Asia and SEMED
9.0
7.0
5.0
3.0
-1.0
-3.0
-5.0
Azerbaijan
Kyrgyz Republic
Belarus
Turkmenistan
Morocco
Tunisia
Mongolia
Egypt
Uzbekistan
Estonia
Jordan
Kazakhstan
FYR Macedonia
Hungary
Latvia
Lithuania
Slovak Republic
Slovenia
Albania
Bosnia and Herzegovina
Cyprus
Kosovo
Montenegro
Serbia
Armenia
Moldova
Ukraine
Russia
Tajikistan
Romania
Poland
Turkey
Bulgaria
Georgia
Croatia
Greece
1.0
-7.0
Source: EBRD forecasts
2016 (REP May 2016, %)
2016 (REP Nov 2015, %)
Change Nov.-May, pp
20