CIS Countries Economic Forecast

Economic Snapshot for the CIS Countries

September 5, 2019

The Russian downturn to reverberate across most of the CIS economies in 2019

The slowdown in Russia, led by lackluster consumer demand and a bleak external backdrop, continues to subdue the regional outlook. In contrast to most economies, growth will accelerate in Azerbaijan and Kyrgyzstan thanks to solid mining sector activity. Outside the region, Ukraine’s outlook improved amid an upturn in Q2 and a more stable political backdrop. 

CIS Countries Monetary & Financial Sector News

Regional inflation ticked down to 4.9% in July (June: 5.0%), mostly driven by another moderation in Russia. Meanwhile, inflationary pressures intensified across most of the region’s other economies, led by jumps in Azerbaijan and Belarus. Outside the region, inflation also rose in Ukraine. Inflation should ease going forward chiefly on weak consumer demand in Russia.

The region’s central banks remained largely dovish in August, either cutting rates or gearing up for their upcoming meetings in September. Policymakers in Belarus trimmed the key policy rates by 50 basis points, while Russia’s Central Bank has been under pressure to sustain the easing cycle amid sluggish economic growth and slowing inflation. 

The Russian ruble dived in early August, after Washington announced a new round of sanctions targeting Russia’s access to financial markets. The ruble remained weak through month-end, and the majority of the region’s other currencies followed suit. That said, the RUB should rebound by year-end and is seen driving an overall appreciation in CIS currencies this year.

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