Economic growth in Central Asia to decelerate, says ADB
The Asian Development Bank (ADB) published the outlook (ADO) 2020 on the economic prospects of Central Asian countries for two years. ADB experts assessed the consequences the five countries of the region will face after the coronavirus pandemic.
The report says that the development of Central Asian countries will sharply slow down. Headline inflation has already accelerated and the food prices have risen in the region, which will further continue. Experts estimate that inflation will climb further to 3.2 percent in 2020, but declining food prices in the latter half of the year could set the stage for easing of inflation in 2021.
Humankind has no power to predict how far the COVID-19 pandemic will go. However, for now it is clear that a sharp and prolonged drop of oil prices, deterioration of production and stagnation of tourism sector will affect the economies of Central Asian countries dependent on these industries.
ADB indicates that the economy of Kazakhstan grew rapidly before the coronavirus outbreak led by gains in services, consumption, as well as foreign and local investment. Economic growth rose from 4.1 percent in 2018 to 4.5 in 2019. According to ADO, price controls and tight monetary policy allows Kazakhstan to trim inflation. Experts estimate that the economic growth will plummet in 2020 due to COVID-19 and reduced oil export earnings. However, already in 2021, it will recover due to stronger oil production and changes in taxation.
ADB experts estimate that the economy of Kyrgyzstan will continue to grow. Growth is forecasted at 4 percent in 2020. Import disruption of raw materials, equipment and food from China and other countries due to COVID-19 pandemic will be held back by manufacturing, construction and other import-dependent industries. If the coronavirus situation worsens and border closures are prolonged, economic growth could slow down.
According to ADB, another country in the Central Asian region that will be significantly affected by the COVID-19 pandemic is Tajikistan. The economic growth is forecasted to diminish to 5.5 percent in 2020 and 5 percent in 2021. However, the coronavirus pandemic is not the only reason for the recession. Low private investment due to a weak business climate will also affect the country’s economy. In addition, since many Tajik workers have lost their jobs in Russia, low remittances will also be the reason of the country’s economy deceleration.
The economic growth is projected to slow down to 6 percent in 2020 and 5.8 percent in 2021 in Turkmenistan. Industrial sector is prognosed to expand by six or seven percent. The gains are expected in agricultural processing, light industry and food products, construction materials and chemicals – all areas that have been targeted for import substitution. Agriculture is projected to expand due to the announced government support for farmers.
ADB estimates that the economic growth in Uzbekistan will likely decelerate to 4.7 percent in 2020 due to the adverse impact of COVID-19 and the lower demand in prices for copper and natural gas.