Page 55 - bne IntelliNews monthly magazine December 2024

bne December 2024 Eurasia I 55
and Belarus have risen by thousands
of percentage points in the last two years. With car sales in Europe stagnant, makers of luxury Western brands have lobbied the EU to not tighten sanctions on Belarus, as it is an open secret that Minsk is now a major way station for their continued sales to the Russian market.
The conflict-induced demand is par- ticularly visible in Belarus, where the economy quickly rebounded from a 2022 recession. Belarus’ industrial output surged by 15% year on year on average so far in 2023, supported by “strong trade ties with Russia” and increased demand for local goods as Western firms exited the Russian market.
In Armenia, industrial production rose more than 25% y/y in the first quarter, while Uzbekistan has posted steady manufacturing growth that often exceeded 15% y/y over the past four years. Uzbekistan is in a particularly sweet spot as its economy was already booming as the raft of economic reforms put in place by Uzbek President Shavkat Mirziyoyev starting in 2016 were already kicking in before war
in Ukraine began, which has only supercharged the growth.
This manufacturing boom is reinforced by a shift in the IT sector across Central Asia and the Caucasus, fuelled by “digital nomads” and skilled Russian workers who relocated after Russia’s 2022 mobilisation. Armenia’s IT and telecoms sector led the region, growing by an average of 41.5%, followed by Uzbekistan at 25.5% and Kyrgyzstan at 8.7%, according to an EBRD report.
Labour market shifts bolster remittances and consumption Russia’s chronic labour shortage
has amplified remittance flows to neighbouring economies like Tajikistan and Kyrgyzstan, as Russia turns to migrants to fill factory benches.
“The high demand for migrant labour in Russia, coupled with rising wages there, has driven up remittances well above pre-war levels, providing substantial support to household consumption
Policy rate forecasts
Selected ex-USSR countries: Retail sales
Selected ex-USSR countries: Balance of payments, services exports
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