Free Trial
Subscription:
China Economic Review
Business Services & Logistics
Defence
Consumer Goods & Services
Financial Services
Food & Drink
Healthcare & Medical Devices
Materials & Manufacturing
Regional Markets
Custom Research
Events & Conferences
Contact
About
Terms & Conditions
Privacy
Home >
Caucasus Business Forecast Report Q2 2010
Management Report
Published: February 2010
Pages: For full details, please email keithw@cmsinfo.com
Tables: For full details, please email keithw@cmsinfo.com
From: GBP 480.00 Buy Now!
Research from: Business Monitor International
Sector: Regional Markets
We continue to expect sharp differentiations in economic growth between the three Caucasuseconomies over the medium term. We now see the Azerbaijani economy growing 11.0% in 2010,up from an estimated 9.0% in 2009, given an expected uptick in oil production and higher oil prices.At the other end, Armenia suffered an estimated 16.5% real GDP contraction in 2009, with its relianceon investment, exports and remittances from Russia contributing to a deep recession. WithRussia set to undergo a robust recovery in 2010, presaging increased demand for exports and anuptick in remittances, we expect the Armenian economy to grow 4.0%. We expect Georgia to postthe weakest growth in 2010 (we forecast a 3.2% real GDP expansion), with political risk concernsfollowing its 2008 war with Russia likely to continue weighing on foreign investor confidence.
We expect a permanent solution to the Nagorno-Karabakh ‘frozen conflict’ within our five-yearforecast period. That said, we stress that tangible progress in the near term will depend on anagreement between Armenia and Azerbaijan on the future legal status of the enclave, with theterms of a future referendum on the extent of Nagorno-Karabakh’s independence likely to be thekey sticking point. In addition, we highlight the continuing risks posed by aggressive rhetoric fromboth sides, which could yet derail the progress which has been made so far.
We see the Armenian economy rebounding strongly in 2010, with 4.0% real GDP growth currentlypencilled in. Russia’s recovery will be key, ensuring strong remittance inflows and higher demandfor exports. In addition, the FDI-financed economic expansion of recent years leaves Armenia withrelatively little external leverage to unwind, while loans from Moscow and multilateral institutionswill ensure that the ongoing current account deficit is adequately covered.
The worst effects of the global financial crisis on the Georgian banking sector have now passed,with financial soundness indicators signalling broad-based stabilisation through Q309. Havingreceived equity injections from major multilateral financial institutions, the country’s major banksnow look better positioned to ride out the effects of real sector deterioration. That said, the processof deleveraging and unwinding bad loans will last into 2011. Thus, while asset contraction (inm-o-m terms) is likely coming to an end, a quick recovery is still unlikely.
We see the Armenian economy rebounding strongly in 2010, with 4.0% real GDP growth currentlypencilled in. Russia’s recovery will be key, ensuring strong remittance inflows and higher demandfor exports. In addition, the FDI-financed economic expansion of recent years leaves Armenia withrelatively little external leverage to unwind, while loans from Moscow and multilateral institutionswill ensure that the ongoing current account deficit is adequately covered.
The worst effects of the global financial crisis on the Georgian banking sector have now passed,with financial soundness indicators signalling broad-based stabilisation through Q309. Havingreceived equity injections from major multilateral financial institutions, the country’s major banksnow look better positioned to ride out the effects of real sector deterioration. That said, the processof deleveraging and unwinding bad loans will last into 2011. Thus, while asset contraction (inm-o-m terms) is likely coming to an end, a quick recovery is still unlikely.