“Exchange rate developments, such as the appreciation of the US dollar and the depreciation of the rouble, are compounding the problem,” media quoted Juha Kähkönen, deputy director of the IMF’s Middle East and Central Asia Department, as saying at the presentation of the report in Kazakhstan on May 19.
The region’s average growth rate this year, the IMF said, would slow to 3.3% from 5.3% in 2014.
A collapse in the price of oil and the value of the rouble have knocked economies in Central Asia and the South Caucasus. Currencies have nosedived, losing around a third of their values in only a few months, governments have scrambled to cut budgets and companies have laid off hundreds of workers.
All the data, in short, paints a turbulent portrait of the last few months and an equally troublesome outlook for the next couple of years.
Mr Kähkönen’s statement came only a few days after the EBRD had issued a similar warning at its AGM in Tbilisi. It drew attention to the sharp fall in remittances to the region from Russia and the impact this would have.
“As the Russian economy has declined, remittances from Russia to Central Asia and to eastern Europe and the Caucasus have been declining at an alarming rate,” the bank said in a statement.
ENDS
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(News report from Issue No. 232, published on May 20 2015)