On November 27, ISET hosted Francois Painchaud, the Resident Representative of the International Monetary Fund (IMF) in Georgia. Mr. Painchaud presented the 2017 October Regional Economic Outlook for the Caucasus and Central Asia (CCA) region, covering the global and regional environment, outlook and policy actions, and policies to help maintain macroeconomic stability and how to secure higher and more inclusive growth.

At the beginning of the presentation, Mr. Painchaud overviewed the main trends in the global and regional environment. Strengthening economic conditions in the region’s main trading partners and stabilizing the commodity prices, combined with continued implementation of structural reforms are anticipated to support the recovery. Growth in the CCA region started to pick up during the second half of 2016 and is expected to accelerate, but medium-term growth is forecast to remain below historical norms.

Despite fiscal balances in many CCA countries deteriorated in recent years as policymakers accommodated lower budget revenues in the context of falling commodity prices and remittances, the IMF predicts fiscal deficits to go down for both oil exporter countries (Azerbaijan, Kazakhstan, Turkmenistan, and Uzbekistan) and oil importers (Armenia, Georgia, the Kyrgyz Republic, and Tajikistan) in the CCA region.

Mr. Painchaud claimed that risks related to global GDP growth have decreased, with global financial stability mainly coming from easier fiscal and monetary policies and fewer credit risks. In order for financial institutions to remain resilient during periods of stress, CCA countries should continue strengthening regulatory and supervisory frameworks. Strengthening consolidated supervision and macroprudential frameworks is essential, and steps toward reducing dollarization risks must continue.

Securing higher and more inclusive growth is critical to the CCA region. To capitalize on opportunities for integration into the strengthening global economy (including through China’s Belt and Road Initiative), institutional frameworks should be enhanced to facilitate investment opportunities and foster private sector development.

At the end of the presentation, Mr. Painchaud highlighted takeaways from the Regional Economic Outlook:

• Recovery continuing, but medium-term growth subdued

• Window of opportunity: better external conditions; Belt and Road Initiative; Uzbekistan; fintech

• To capitalize on the opportunity, countries need to take action:

More growth-friendly fiscal consolidation

Stronger monetary policy frameworks

Financial sector repair

Structural reforms

• Bold action would secure higher, more inclusive growth

The presentation was followed by the Q&A sessions. Also, see the link for Regional Economic Outlook in the Caucasus and Central Asia, October 2017.