Kyrgyzstan faring well in economic crisis, IMF says

Kyrgyzstan, Tajikistan and Georgia are reportedly faring better in the global recession than other Central Asian countries, Regional economic outlook: Middle East and Central Asia-2009, by the International Monetary Fund said.

The global crisis has severely impacted the Caucasus and Central Asia (CCA), with growth for the region projected to drop from 6.6 percent in 2008 to 1.5 percent in 2009.

Most CCA energy exporters are projected to record solid growth in 2009, given limited linkages to international markets, long-term energy export contracts, and supportive policies. The energy importers, however, are facing a marked slowdown in growth and deteriorating living standards as a result of a sharp drop in remittances from Russia. A modest recovery for the region as a whole is expected in 2010.

Kazakhstan, however, is in the midst of a banking crisis and is likely to see negative growth of about 2 percent in 2009. With global energy demand increasing again, the energy exporters should continue to see solid growth rates in 2010. CCA energy importers are being hit to varying degrees.

The recovery in 2010 is projected to be slow and gradual. “Policymakers have responded to the downturn by easing fiscal and monetary policies and strengthening social safety nets. In the energy importers, where governments have little space to implement such measures, donors, including the neighboring states of Russia and China,” the IMF experts said.

In 2010, where possible, fiscal policy should continue to be supportive of growth and prioritize social protection. Additional donor support on concessional terms will be needed for the energy importers to prevent a buildup of unsustainable debt levels. The energy exporters should use part of their anticipated increase in revenue from rising energy prices to push ahead with structural reforms.