CIS Countries Economic Forecast

Economic Snapshot for the CIS Countries

January 14, 2020

Accelerating activity in Russia, propped up by looser monetary policy and fiscal stimulus measures, is set to propel regional growth this year. Growth is also seen picking up in Belarus, while largely steady    momentum in Kazakhstan and Ukraine should further cement overall growth in CIS Plus. That said, a volatile external environment remains a key risk to the outlook.

CIS Countries Monetary & Financial Sector News

Regional inflation declined for the fifth consecutive month in December, coming in at a 17-month low of 3.7% (November: 4.1%). The moderation was largely driven by another fall in Russia, where inflation dropped to a 13-month low, and in Ukraine, where it slowed to the lowest level since March 2014. Price pressures remained mostly stable across the rest of the region.

Russia’s Central Bank brought its key policy rate down to a six-year low in December amid slowing inflation and frail activity growth. Furthermore, policymakers in Ukraine chopped the key interest rate for the fifth time in 2019 in the same month, although the monetary policy stance remained contractionary. Meanwhile, Kazakhstan’s Central Bank stayed put in December. 

The region’s major currencies gained ground against the U.S. dollar in recent weeks. The Russian ruble hit a year-and-a-half high against the greenback at the beginning of January, while Ukraine’s hryvnia soared to four-year high at the end of 2019, supported by robust demand for government debt. Similarly, the Kazak tenge posted moderate gains against the U.S. dollar.

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