BAKU, Azerbaijan, June 9. Despite the strong recent economic results, it will be important for countries in the Caucasus and Central Asia (CCA) region to accelerate market-oriented reforms, Managing Director of International Monetary Fund Kristalina Georgieva told Trend.
"At the IMF, we found that structural reforms could boost CCA output by 5 to 7 percent in the medium term. On my trip [to Kazakhstan], we plan to release an IMF paper that contains those findings. Reforms to reduce the role of the state, for example, could significantly boost medium-term growth-helping cushion the economy against future shocks," she said.
As Kristalina Georgieva noted, economies in the CCA region performed relatively strongly in 2022, yet due to the war in Ukraine and the increased risk of fragmentation, the outlook remains highly uncertain.
"For Kazakhstan, we project growth to accelerate from 4.3 percent in 2023 to 4.9 percent in 2024. This rather strong activity is encouraging, because it comes mostly from the non-oil sectors of the economy," she said.
According to the managing director, overall, the fund projects global GDP to grow 2.8 percent in 2023 and 3 percent in 2024.
"Inflation has proven to be sticky, and financial-sector pressures have added to the uncertainty in the global economy. High debt levels, geoeconomic fragmentation, and climate change pose significant challenges. This clouds everyone’s prospects — especially the most vulnerable," Georgieva added.
Furthermore, she said that global inflation is forecast to be 7 percent in 2023, but core inflation is not expected to drop to central banks’ targets until 2025.
"With this in mind, we are urging central banks to keep monetary policy tight. Fiscal policy in many countries has room to be tightened to help ease inflation pressures, restore debt sustainability, and rebuild fiscal buffers. Any additional fiscal support should aim to help the most vulnerable," she said.