ADB upbeat on Central Asia outlook

Volatility in oil markets has an impact on Central Asian economies

In this story: Improved growth Upbeat outlook RELATED STORIES, SITES

MANILA, Philippines -- The Asian Development Bank sees good economic growth for Central Asian republics in 2001, although at a rate only about half last year's 7.8 percent figure.

"The improvement in the Russian economy since 1999 and the rise in international energy prices have helped generate strong aggregate gross domestic product growth," the bank said in its Asian Development Outlook 2001.

The countries' growth rate would have been higher had it not been for a severe drought that affected the agriculture sector. In particular, it hit the cotton crop, which is a major export item, and food grain production in some countries.

The report also said that Central Asian republics such as Kazakhstan, Kyrgyz Republic, Tajikistan and Uzbekistan face severe economic and physical challenges.

These include the small size of the countries' economies and remoteness; dependence on production of energy and minerals; vulnerability to oil and commodity price volatility; dependence on the Russian economy (still the single largest market for their exports); and their outmoded industrial structure from the Soviet era.

In response, the various governments of the subregion have started large-scale structural reform programs, which should help them recover from the economic downturn.

Improved growth

The ADB's outlook report points out that improved growth has been achieved along with overall macroeconomic stability, reflecting the positive effects of exchange rate stability and tighter monetary policies.

Increased revenues from the oil sector and moves to improve public expenditure management and tax administration have also seen the countries' fiscal balances improve.

However, aggregate inflation in the subregion remains high at about 15 percent.

"The focus has to be on generating pro-poor growth while maintaining macroeconomic stability," the bank says. "This will require liberalizing the economies further, in keeping with individual country conditions."

Upbeat outlook

In Azerbaijan, growth may decline for 2001 as world oil prices soften and as the country sees a slowdown in foreign investment.

In Kazakhstan, the outlook for 2001 remains positive, although growth is projected to slow to 4 percent as world prices of oil and minerals level off.

In the Kyrgyz Republic, the economy has the potential to grow faster than 5 percent in 2001 if the Government achieves a sustainable level of internal balance and if financial sector reforms are implemented properly.

In Mongolia, GDP growth is likely to pick up to 3 percent in 2001 and 4 percent the year after as forecast for stabilization and economic reforms have improved with the installation of a new Government.

In Tajikistan, overall GDP is expected to grow by 5 to 6 percent in 2001 and 2002, led by faster growth in newly privatized businesses and farms.

And in Uzbekistan, annual GDP growth is projected to remain at about 3 percent in 2001 and 2002.

ADB sees dip in growth for Asia
April 19, 2001
ADB warns of higher external risks
March 19, 2001

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