On November 8, ISET was visited by Mr. Juha Kahkonen, Deputy Director of the Middle East and Central Asia Department of the IMF, who gave a presentation on the fact that global trade tensions and slowing growth amongst key trading partners are affecting the Caucasus and Central Asia (CCA) region. However, Mr. Kakhonen explained that despite a decline in export growth, a looser fiscal stance and rising retail credit is expected to maintain broadly stable growth for the region in 2019–20
The IMF’s CCA Deputy Director then examined the issues in-depth and stated that in order to foster higher and more inclusive growth and raise living standards, CCA policymakers should strengthen competitiveness, leverage comparative advantages, and foster diverse sources of growth to reap the gains from trade and integration into global value chains. In addition, revitalizing FDI by easing restrictions and promoting macroeconomic stability while deepening domestic financial markets can provide more stable sources of funding, mitigating the risk of volatile portfolio flows. This portfolio flows to the region’s economies are nearly twice as sensitive to global market sentiment compared to other emerging economies, exposing the region to abrupt shifts.