ALMATY/April 5 (The Bulletin) — The coronavirus will undermine what had looked like a strong year of economic growth in 2020 and instead knock the Central Asia and South Caucasus region into a recession.

Of the six countries in the region that have declared states-of-emergencies and infections of the coronavirus, only Kazakhstan has officially said that its economy will shrink in 2020 but analysts expect others to follow.

Kazakh economy minister Ruslan Dalenov said on April 2 that the combined impact of the coronavirus and a fall in oil prices mean that Kazakhstan’s economy will shrink by 0.9% in 2020.

Oil is Kazakhstan’s main export and with prices dropping by 40% to around $35/barrel because of a price war and a drop in demand triggered by the spread of COVID-19, the disease caused by the coronavirus, Mr Dalenov said oil exports would fall.

“A decrease is also expected compared to previously approved growth rates in the manufacturing industry, agriculture, construction and the services sector, including trade,” he said. 

Kazakhstan had previously predicted GDP growth of 4.5% for 2020. It last went into a recession in 2016 after a previous oil price collapse.

In Armenia, the Central Bank is still predicting GDP growth this year but only of 0.7%, down from an earlier prediction of 7.6%.

Other countries have held off giving predictions on the economic cost of the spread of the coronavirus although they have all said that their original growth estimates are likely to be heavily reduced.

ENDS

— This story was first published in issue 441 of the Central Asia & South Caucasus Bulletin

— Copyright the Central Asia & South Caucasus Bulletin 2020