BAKU, Azerbaijan, Aug. 19
By Nargiz Sadikhova - Trend:
The economic downturn in Kazakhstan and Uzbekistan as a consequence of the COVID-related crisis will be significantly lower than in many other countries, Russia and CIS Economist at Renaissance Capital Sofya Donets told Trend.
In her words, the Central Asian countries, including Kazakhstan and Uzbekistan, have felt significant consequences of this crisis, but the economic downturn in these countries this year as a whole may be significantly lower than in many developed and developing economies.
“The factors that mitigated the impact of the COVID-19 pandemic and subsequent quarantine measures for Kazakhstan and Uzbekistan were such structural features as a relatively low share of consumer services (for example, tourism) and small and medium-sized enterprises which are most sensitive to quarantine, a high level of employment, including in the public sector, as well as good industrial potential,” she said.
Furthermore, she said, it was important that these countries approached this year in good shape - with GDP growth above 4 percent, a relatively low level of public debt, and a balanced budget position.
“This provided means for the implementation of proportional government support measures during the COVID-19 pandemic,” Donets said.
In her words, both countries faced a second increase of COVID-19 cases after the initial quarantine measures were lifted, which required the re-introduction of certain restrictions.
“However, currently, we believe that the peak of COVID-19 has been passed in both countries, not only due to the effectiveness of introduced restrictions, but also due to the fact that a certain natural threshold of morbidity was reached (about 20 percent of the population), after which we saw a situation stabilization in most of the countries. We expect a smooth recovery in economic activity of these countries by the end of the year,” she added.
As a result, in accordance with the agency's baseline forecast, Uzbekistan may end the year without a recession (possibly with an increase of about 1 percent), while Kazakhstan will face a moderate recession (2.2 percent).
“In the medium term, both countries have good growth potential, in our opinion, which is supported by favorable demographics, a balanced reform agenda, and maintenance of a stock of catching-up growth in several sectors and markets. The attractiveness of these countries for investors is also facilitated by a balanced fiscal and external position and a stable financial system,” Donets concluded.
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