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Kazakhstan and Mongolia
all three countries, contributing to an upward revision of the development bank’s forecasts for the entire Central Asia and Caucasus region by 0.1 of a percentage point (pp) to 4.1%.
“Higher prices for oil and natural gas, coupled with rising exports and investment are driving slightly higher growth in Central Asia, which is expected to hit 4.1% this year,” the bank commented.
Kazakhstan’s faster than expected growth, leading to a raising of its projected growth this year from 3.2% to 3.7%, was a result of higher oil prices and petroleum production.
The bank raised its projection for mineral-rich Mongolia even more sharply from 3.8% to 6.4% this year and from 4.3% to 6.1% for 2019. “Surging consumption and exports raise growth prospects in Mongolia substantially beyond earlier forecasts,” it explained.
Meanwhile, both Armenia and Georgia shrugged off political instability — the ‘people’s revolution’ in Armenia and the protests that ousted former prime minister Giorgi Kvirikashvili in Georgia — to hike growth in the first half. Consequently, the ADB raised its forecast substantially from the 4.0% forecast earlier this year to 5.3% for Armenia, and from 4.5% to 4.9% for Georgia.
By contrast, several other economies in the region had their forecasts downgraded in September: “2018 forecasts are now lower for the Kyrgyz Republic as mining output slows, for Turkmenistan in the expectation of fiscal tightening, and for Uzbekistan with protracted adjustment to a new exchange rate regime,” the bank said. Turkmenistan does, however, remain the fastest growing country in the region after Mongolia this year. Azerbaijan, which is recovering from a sharp contraction in GDP growth in 2016 driven by a fall in oil prices, is the slowest growing, with the ADB maintaining its forecast for this year at 1.7%, up from just 0.1% last year as the South Caucasus country continues its recovery.
The report also looks ahead to threats to growth. “Emerging headwinds cast uncertainty on the region’s future growth trajectory,” it warns. “In addition to escalating trade tensions, tightening global liquidity could further cloud prospects over the coming year.”
The impact of worsening trade conflicts on cross-border production networks is identified as the single biggest risk, though the ADB also warns of financial shocks should the US Federal Reserve raise interest rates faster than currently expected to stave off inflation.
Meanwhile, the bank cut its 2018 inflation forecast for the Central Asia and Caucasus region by 0.1 pp to 8.4%, citing improved exchange rate stability that has helped contain price pressures in Azerbaijan. Below-expectations inflation in the first half of this year also led to lower 2018 forecasts for Georgia, Kyrgyzstan and Tajikistan.
16  GEORGIA Country Report   November 2018    www.intellinews.com


































































































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