UN forecasts inflation reduction in CIS

UN forecasts inflation reduction in CIS

Azerbaijan, Baku, Jan. 18 / Trend A. Akhundov /

The UN forecasts inflation for the region expected to decelerate to 7.8 per cent in 2012 and is likely to decline further in 2013, the data indicated in the organization's report "World Economic Situation and Prospects 2012" said. The main economic report was published on the UN website on Wednesday.

"Inflation for the region accelerated to 9.6 per cent in 2011, up from 7.1 per cent in 2010," the report said. "But headline inflation peaked in the Russian Federation and declined sharply in the second half of the year as the impact of the 2010 drought diminished. In Belarus, the devaluation of the rouble resulted in a sharp acceleration of inflation. In Kazakhstan, the one-off effects of customs union with Belarus and the Russian Federation resulted in price increases, as some imports became more expensive. According to the UN's economic outlook, more subdued growth due to global slowdown will lead to more moderate increases in prices in the region."

According to the report, economic growth strengthened fiscal positions throughout the region in 2011, especially in the energy-producing economies.

Despite high oil prices, payroll tax reform and increased tariff revenue in the Russian Federation, the budget ended roughly in balance, indicating its vulnerability to changes in the external environment. In Kazakhstan, a doubling of the duty on oil in 2011 to $40 per ton helped to reduce the deficit. Meanwhile, several countries in the region continued to receive external resources to support their economies. Among these, fiscal consolidation was substantial in Ukraine, while in Kyrgyzstan increased social and infrastructure spending widened the deficit.

According to the report, with a weakening of oil prices, deficits are likely to widen unless revenue is strengthened, the UN projects. This holds for the Russian Federation, in particular, where greater social and public spending in the run-up to the presidential elections is expected to widen the fiscal budget deficit.

Improved terms of trade and better employment prospects supported domestic demand in the region. In Belarus, domestic demand contracted, but exports rose strongly as a consequence of a sharp devaluation of the rouble. This was triggered by significant pressures on foreign-exchange reserves as large State spending and unsustainable growth in wages and credit fuelled import demand. In Azerbaijan, repair works at some drilling platforms disrupted oil production and contributed to a sharp deceleration in growth. By contrast, gas exports increased in Turkmenistan due to new infrastructure. The recovery from political unrest in 2010 and donor-funded infrastructure significantly boosted output in Kyrgyzstan.

The region experienced a significant rebound in agriculture after a bad harvest in 2010. This was
especially important for Armenia and Ukraine, the document said.

The economic recovery has been accompanied by a modest improvement in labour market indicators, with unemployment rates falling in the largest countries in the region. The economies of Georgia and the Republic of Moldova have shown limited ability to generate more jobs, despite continued output growth. In the outlook, labour market indicators are expected to improve modestly in the region.

The aggregate current-account surplus of the region widened, mainly due to the improved performance of Kazakhstan and the Russian Federation. Higher commodity prices and increased export volumes have driven an increase of exports in the region. The Russian Federation's external surplus underpinned significant capital outflows to the tune of $49.3 billion during the first nine months of 2011. In Ukraine, strong import demand, due in part to investment and construction related to the Euro 2012 football championships, offset higher exports and led to a widening of the current account deficit. But the UN report estimates that global economic slowdown is likely to reverse this trend.

In the Russian Federation, a moderation of inflationary pressures in the last part of 2011 and deterioration of the economic outlook led to a pause in interest rate increases. However, foreign-exchange interventions to support the Russian rouble amid worsening risk perceptions resulted in tighter liquidity. In 2012, growing downside risks to the global economy and lower inflationary pressures may prompt a loosening of the monetary stance in the region, the UN finds. This has already taken place in Armenia and Georgia, where key interest rates were reduced in the second half of 2011, and in Georgia, reserve requirements were loosened to stimulate the long-term financing of commercial banks, the report said.

Although adjustments induced by the last recession have reduced reliance on external funding in Kazakhstan and the Russian Federation, thus lowering their vulnerability, foreign financing remains critical for the region, in particular for Ukraine and other non-energy-exporting countries that continue to have large current-account deficits. For some countries, the increased likelihood of slower global economic activity is likely to impair access to global capital markets. Moreover, the financial sector remains fragile in several economies. This is dampening domestic demand. In a pessimistic global scenario, the CIS economies would enter into a recession with GDP falling on average by 2 per cent.
The Russian economy would suffer more than most, and contract by 3.6 per cent should the downside risks materialize, says the UN report.

Subscribe to Trend in Google News! Subscribe
Ranking of natural gas importers from Azerbaijan
Ranking of natural gas importers from Azerbaijan
Azerbaijan reveals oil exports to Canada in 10M2021
Azerbaijan reveals oil exports to Canada in 10M2021
Weekly review of main events in Azerbaijan's transport sector
Weekly review of main events in Azerbaijan's transport sector
Loading Bars
Latest
Azerbaijan hands over 10 persons of Armenian descent to Armenia
Erdogan discusses humanitarian aid with Red Crescent, Red Cross
Uzbekistan intends to increase dried fruit exports to China
No Omicron strain detected in Georgia - NCDC Head
Aligarh’s Areeba shoots to fame, breaks stereotypes about Muslim girls
Iran’s Bahar Azadi gold coin price skyrockets
Azerbaijan shares data on number of vaccinated citizens
Azerbaijan confirms 1,406 more COVID-19 cases, 1,787 recoveries
Tactical exercises held in Azerbaijan's commando military unit - MoD (PHOTO/VIDEO)
New composition of Supervisory Board of Azerbaijan Industrial Corporation approved
Iran reveals COVID-19 data for December 4
President Ilham Aliyev sends congratulations to heads of Thailand, Finland
France, Europeans working to open joint mission in Afghanistan - Macron
Ranking of natural gas importers from Azerbaijan
Uzbek Commodity and Raw Materials Exchange reveals volume of its transactions
SOCAR Georgia Gas announces tender on gas stations restoration
Iran eyes increase in passenger transportation via Yazd Shahid Sadooghi Airport
Azerbaijan reveals oil exports to Canada in 10M2021
Weekly review of main events in Azerbaijan's transport sector
Turkmenistan’s president approves anti-crisis program for 2022
Azerbaijan’s liberated territories have high potential for solar energy - RES agency
Weekly review of key events in Azerbaijan's ICT sector
Russian company to help automate, digitalize processes in Uzbek energy sector
Iran reaches increase in load/unload operations in Shahid Bahonar port
Top 10 Azerbaijani oil importers
MFA reveals reason why Armenia-Azerbaijan ministerial meeting didn't take place
Kazakhstan talks construction of wind power plants in Kostanay region
Azerbaijan achieves practical results to restore hydropower plants in liberated lands - agency's CEO
Azerbaijan’s metallurgical company notes increases in steel production over 9M2021
Iran also to be able to take advantage of Zangazur corridor – ex-Iranian ambassador to Azerbaijan
Russia-UAE trade turnover hits fresh all-time high surpassing $4 bln - Mishustin
Kazakhstan’s Almaty Power Plants to buy pumping, ventilation equipment via tender
Azerbaijan discloses oil exports to Ukraine over 10M2021
Azerbaijan unveils volume of oil exports to Belarus in first 10M2021
Georgian Railway shares updated report on income within 9M2021
Azerbaijan’s 10M2021 oil exports to UK revealed
Kazakhstan to timely fulfill its obligations under COP26 – PM
Azerbaijan opens investment tender to privatize Sumgayit Construction Service company
Iran finds way to supply its far north, north-east provinces with gas
Georgia releases COVID-19 data for December 4
LUKOIL Uzbekistan Operating LLC opens tender for supply of shut-off and control valves
Mikheil Saakashvili not to be treated abroad – Georgia's minister
Russia offers Azerbaijan to switch to barcoding for fruit, vegetables exports
Tripartite gas swap deal with Turkmenistan, Azerbaijan, may help Iran kill two birds with one stone
Azerbaijan Mortgage and Credit Guarantee Fund issues record amount of loans in 10M2021
Goods movement across Azerbaijani-Russian border to be accelerated
Azerbaijani oil prices increase
Kazakhstan boosts trade with Romania over 9M2021
Weekly review of Azerbaijan's oil & gas sector
Weekly review of Azerbaijani precious metals market
Weekly review of Azerbaijani currency market
Treatment of servicemen injured in helicopter crash of Azerbaijan’s State Border Service continues
Turkey to support Azerbaijan in installing seismic stations in Karabakh
Iran aims to increase local solar power production
Gamaleya Center ready to accept state order for up to 10 mln sets of Sputnik M
Kazakhstan’s Intergas Central Asia to buy welding equipment via tender
Georgia’s export of oil products increases
India’s air defence gets a big boost, Russia starts delivery of S-400 missiles
India's defence procurement guided by national security interests: MEA
Uzbekistan shares domestic COVID-19 data for December 3
Iranian currency rates for December 4
Turkey's export product labeling changes
S.Korea reports record-high COVID-19 cases, deaths
Iran, China review cinematic cooperation
Georgia and Poland have potential for development of bilateral trade
Kyrgyzstan, Russia presidents hold telephone conversation
Japan PM Kishida likely to cancel U.S. visit due to Omicron
Militants kill at least 31 in central Mali, say local authorities
Tunisia confirms 1st case of Omicron variant infection
Turkey confirms 21,495 daily COVID-19 cases
France announces new travel restrictions
IMF chief says Omicron could dent global economic growth
France evacuates more than 300 people from Afghanistan
UK records more than 50,000 new coronavirus cases
Italy's economy projected to grow 6.3 pct this year
Kazakhstan decreases petroleum gas export to Hungary amid global pandemic
Militants kill 7 soldiers in Nigeria's northeastern Borno state
Iran nuclear talks adjourn, resume next week
South Africa hit by fourth COVID wave driven by Omicron
Budget for social rehabilitation and childcare to reach 52 mln GEL next year, Georgian PM says
Putin informs Erdogan on main results of Sochi trilateral meeting
Turkey introduces action plan to improve lives of the disabled
Construction of 50MW solar power plant underway in Kazakhstan
Azerbaijani FM, OSCE rep exchange views on OSCE Charter (PHOTO)
Human remains discovered in Caspian Sea and recovered - SOCAR
Iran highlights need for more customs cooperation with Pakistan
Volume of investments in construction of bp's power plant in liberated Azerbaijani lands revealed
Turkmen gas may be supplied to Europe via Caspian Connector project - ambassador
Turkish, Russian Presidents hold phone talks
Azerbaijan’s Pasha Holding talks about development strategy
Azerbaijan's Heydar Aliyev Foundation, UNICEF sign another memorandum of understanding (PHOTO)
Azerbaijan shares data on number of vaccinated citizens
Azerbaijani, Turkish military pilots conduct joint training flights in Baku (PHOTO/VIDEO)
Azerbaijan confirms 1,703 more COVID-19 cases, 2,180 recoveries
Turkmenistan can supply natural gas to European market until 2050 - ambassador
Azerbaijan discloses export volume of petroleum coke
Azerbaijan's Finance Ministry to auction gov't bonds via Baku Stock Exchange
SOCAR begins testing of new mobile diving complex
Israeli co Fireblocks raising $400m at $8b valuation
Croatia remains one of Russia’s key partners in EU
All news