Page 53 - bne IntelliNews monthly magazine December 2024

bne December 2024 EuraEusraisaia I 53
temporarily disappeared from its shelves as Western firms producing non-sanctioned items left the market for reasons of reputational risk.
The ongoing conflict has also driven investment into sectors like logistics and IT, especially from Russian sources. Tourism, a traditionally smaller sector, has also seen renewed interest and FDI inflows, further supporting GDP growth. Armenia and Georgia have led the way with significant upticks in FDI following Russia’s 2022 partial mobilisation, which saw an exodus of funds and skilled workers to the region. Armenia’s FDI peaked after Russia's third quarter mobilisation announcement, while Georgia and Belarus saw their FDI flows peak in mid-2023 before easing to historic levels in 2024.
GDP growth revised up
Although growth is forecasted to moderate in the next two years, recent data has led to revisions in expectations, says Oxford Economics. Growth forecasts for Georgia, Azerbaijan and Tajikistan in 2024 have been raised
by 3.1, 1.5, and 1.7 percentage points respectively.
Belarus and Moldova saw more modest adjustments, while Armenia’s growth forecast was cut by 1 percentage point to 6.8%. Analysts expect Armenia, Azerbaijan, Belarus, Georgia and Kyrgyzstan to maintain above-average growth rates in 2024, driven by “a combination of external and domestic factors,” says Oxford Economics.
Among the few exceptions, Moldova’s economy has struggled to regain its footing following a 4.6% contraction in 2022. Its GDP grew by only 0.7% in 2023, with an expected 3% growth this year, a pace below historic averages.
Sanctions on Russia are a good thing
Oxford Economics suggests this divergence reflects a broader trend where those countries that are more integrated with Russia’s economy
have done far better than those with more diversified business interests.
In this context complying with Western sanctions would be extremely
Selected ex-USSR countries: Inbound FDI
Selected ex-USSR countries: Industrial production
Ex-USSR countries: Our GDP forecasts vs historic averages
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