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EDB Macroeconomic Outlook 2024–2026

Vinokurov, E., Kuznetsov, A., Melikhova, M., Berdigulova, A., Fedorov, K., Dolgovechny, A., Babajanyan, V.

Online presentation of the Macroeconomic Outlook is available here.

The Eurasian Development Bank has published its Macroeconomic Outlook, presenting a preliminary overview of economic developments in the Bank’s member states for 2023, along with key macroeconomic projections for 2024, as well as 2025 and 2026.

EDB analysts shared insights into the key trends observed in the global economy and their repercussions on Eurasia. The imposition of tighter monetary conditions around the world, primarily in developed nations, has notably curbed consumer price growth. However, this policy has significantly increased borrowing costs for households and businesses. Consequently, the global trend of economic slowdown not only persists but has preconditions for exacerbation. High interest rates are expected to be a key factor contributing to the low GDP growth rates in the U.S. and euro area in 2024. While the U.S. economy may likely evade recession, a decline in consumption will decelerate GDP growth from 2.3% in 2023 to 1.0% in 2024. Economic growth in the euro area is projected to remain feeble, hovering around 0.9% in 2024 after 0.5% in 2023. China’s GDP growth is anticipated to average close to 4% between 2024 and 2026.

The subdued global economic growth is expected to restrain the demand for commodities, thereby constraining the potential for increased export earnings in most EDB economies. However, the proactive utilisation of internal growth sources has led to an improvement in the 2023 estimate and 2024 projections. The persistent implementation of stimulating fiscal policies and structural transformations foster an environment conducive to investment and consumer activity. EDB analysts forecast a 2% growth in the region’s GDP by the end of 2024.

Key macroeconomic projections for the EDB member states in 2024

Source: EDB analysts’ calculations

Following Kazakhstan’s economic growth of 4.8% in 2023, an acceleration in GDP growth rates to 5% is anticipated for 2024, further bolstered by high investment activity. The expected decrease in interest rates is poised to provide an additional impetus to economic growth. In the medium term, structural transformations are set to improve the quality of economic growth by expanding opportunities in manufacturing and services. Economic diversification creates prerequisites for an anticipated acceleration in 2025 and 2026, positioning Kazakhstan as a leader among EAEU member countries in terms of economic growth rates.

EDB analysts posit that the economies of Russia and Belarus have fully adapted to the new environment, rebounding to end-2021 levels as early as Q3 2023. This became possible due to the establishment of new value chains and a refocus on domestic demand. The resulting momentum is expected to maintain its impact, projecting a 1.5% growth rate for Russia in 2024, with further acceleration anticipated in 2025 and 2026. Belarus’s economy is forecast to grow by 2% in 2024, surpassing the past decade’s average.

Strong domestic demand supported high economic activity in Armenia, the Kyrgyz Republic and Tajikistan in 2023. EDB analysts project a slight deceleration in these countries in 2024, albeit with GDP growth rates still noticeably higher than the global average: 5.7% in Armenia, 4.5% in the Kyrgyz Republic and 7.3% in Tajikistan.

EDB researchers also expect the inflationary trend across the Bank’s region to slow further, with the aggregate inflation rate to decrease to 5.8% by the end of 2024 from 7.8% in 2023. Despite this trend, inflation is projected to persist above targets in most countries in the region. In 2024, analysts at the Bank anticipate inflation rates to reach 3.6% in Armenia, 8% in Belarus, 7.1% in Kazakhstan, 7.8% in the Kyrgyz Republic, 5.4% in Russia, and 6.6% in Tajikistan.

In 2024, a slowdown in inflation is anticipated to pave the way for a gradual decline in interest rates in most countries in the region. EDB analysts expect that the National Bank of Kazakhstan will continue to reduce its base rate closer to 10% per annum by the end of 2024. The Bank of Russia is expected to embark on a cycle of rate cuts no earlier than Q2 2024, with projections indicating a decrease to 10.5% per annum by year-end.

Under the baseline scenario, EDB analysts expect an average annual RUB/USD exchange rate of around 92 for 2024. As exports regain momentum and domestic demand cools down, the improved current account balance is anticipated to mitigate exchange rate volatility. The KZT/USD exchange rate is forecast to average 470 in 2024.

EDB projections. Key macroeconomic indicators of the EDB member states (baseline scenario)

Note: GDP, inflation - % YoY; exchange rate - units of the national currency for 1 US dollar
Sources: calculations by EDB analysts

You can also view the EDB Macroeconomic Outlook at the EDB website.

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