CIS Countries Economic Forecast

Economic Snapshot for the CIS Countries

April 8, 2020

Economic activity  worsened drastically in March

The outlook worsened drastically in March, as the Covid-19 pandemic is seen dampening both domestic and external demand, and pushing the regional economy into recession in 2020. The Russian economy is set to be the hardest hit, amid crashing oil prices and widespread lockdowns. Dwindling remittances from Russia are likely to hurt the region’s smaller economies in turn.

CIS Countries Monetary & Financial Sector News

Regional inflation ticked down to a three-year low of 3.0% in February (January: 3.2%), marking the ninth consecutive month of easing. This was mostly driven by another moderation in Russia, where inflation dipped to a 20-month low, and Ukraine, where it dived to the lowest reading since February 2014. Inflation rose in Azerbaijan, Kazakhstan and Kyrgyzstan, however.

Regional central banks adopted a variety  of policy responses to combat the increasingly severe fallout from the Covid-19 pandemic. Authorities in Armenia , Kazakhstan, Moldova and Ukraine cut their key policy rates over the past month in efforts to buttress economic activity. In contrast, central banks in Azerbaijan, Georgia and Russia stayed put, the latter mostly in order to stabilize the collapsing ruble.

The majority of the regional currencies plunged dramatically against the U.S. dollar in recent weeks as a rapidly worsening economic backdrop amid the Covid-19 pandemic fueled fears of a global recession and sent investors fleeing from emerging market currencies. The Russian ruble was particularly hard hit due to its exposure to collapsing global oil prices.

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