EDB Macroeconomic Outlook: Maintaining High Rates of Economic Growth in 2025

The Eurasian Development Bank has published its Macroeconomic Outlook for six member states. The Bank's analysts expect GDP growth rates in the region to gradually recover to their equilibrium levels. GDP growth in 2025 is projected to be 5.5% in Armenia, 2.6% in Belarus, 5.5% in Kazakhstan, 8.7% in Kyrgyzstan, 2.4% in Russia, and 8.4% in Tajikistan.

Almaty, 5 December 2024. The Eurasian Development Bank (EDB) has published its Macroeconomic Outlook, summarising a preliminary overview of economic developments in the Bank's member states in 2024, along with key macroeconomic projections for countries in the region for 2025, as well as for 2026 and 2027.

EDB analysts share insights into the key trends observed in the global economy and their impacts on Eurasia. The world economy is expected to grow slower on average in 2025-2027 than in the 2010s. Global GDP growth is projected to be constrained by negative structural factors: slowing labour productivity growth in the context of wage growth, lower labour allocation efficiency and competitiveness, as well as fragmented global economy and weakening role of foreign trade as a driver of economic growth. In this context, the US GDP growth would slow down from 2.8% in 2024 to 1.6% in 2025. Economic activity in the euro area is expected to gradually recover on the back of lower interest rates, a rebound in manufacturing activity after almost two years of decline and a moderate increase in consumption. Euro area GDP growth is projected to be 1.1% in 2025, up from 0.7% in 2024. China's economic growth would accelerate from 4.8% in 2024 to 5% in 2025, driven by large fiscal stimulus and monetary easing. Inflation in the US and the euro area is expected to remain above the Fed's and the ECB's target levels, which, together with the risks of accelerating price growth, would call for higher interest rates to be maintained in the advanced economies.

Subdued global economic growth is projected to lead to mixed price developments in commodity markets. Oil prices would decrease due to growing supply amid weak demand. Metal prices, however, are set to rise on the back of low-carbon energy development and lower interest rates in advanced economies. Food prices are expected to rise after a significant decrease in 2023-2024.

The EDB region will continue to rely on domestic sources of growth to sustain economic activity in the face of weak external demand. The negative impact of lower oil prices on the economies of energy-exporting countries is expected to be cushioned by greater diversification of export portfolios and increased opportunities for external borrowing at lower interest rates offered by the world's leading central banks. EDB analysts estimate that GDP growth in the Bank's region of operations would be 2.9% in 2025.

Key Macroeconomic Projections for EDB Member States in 2025

Source: estimates of EDB analysts.

Kazakhstan's GDP growth would accelerate to 5.5% in 2025. Positive factors that are expected to ensure high growth rates throughout the forecast period include expansionary fiscal policies, lower interest rates, increased oil production, and government programmes aimed at regional development and infrastructure construction.

EDB analysts forecast that the economies of Russia and Belarus will maintain high growth rates in 2025 - at the levels of 2.4% and 2.6%, respectively. In Russia, economic expansion would be supported by fiscal stimulus and growth in exports to China. In Belarus, the key growth drivers would be stronger demand from Russia and high consumption.

Strong domestic demand and robust exports are expected to ensure that Armenia, the Kyrgyz Republic, and Tajikistan enjoy economic growth above the global average. In the Kyrgyz Republic and Tajikistan, manufacturing is projected to grow faster than GDP, with strong investment activity. GDP growth in 2025 would be 5.5% in Armenia, 8.7% in the Kyrgyz Republic, and 8.4% in Tajikistan.

EDB analysts expect inflation to gradually approach target levels in the countries of the region. Aggregate consumer price growth would slow from 7.9% in 2024 to 6.4% in 2025. High interest rates would continue to dampen inflation, which is forecast at 6.5% in Russia and 7.3% in Kazakhstan. In Armenia, inflation is projected to increase to the lower end of the target range (4+/-1.5%), reaching 3.1%. In Kyrgyzstan and Tajikistan, price growth is forecast within targeted levels, with inflation by the end of 2025 at 5.0% and 5.8%, respectively. Belarus is expected to see a moderate acceleration in price growth, with inflation reaching 6.6% by the end of 2025.

Easing inflation will create opportunities for lower interest rates in Kazakhstan and Russia. EDB analysts forecast that the National Bank of Kazakhstan will continue to cut the policy rate, which is likely to reach 11.25% by the end of 2025. The Bank of Russia is unlikely to start a cycle of rate cuts until Q3 2025 at the earliest, and by the end of the year the rate will be around 19%.

Given the increased volatility of national currencies at the end of the year, exchange rate risks are shifting towards weaker positions against the dollar compared to the baseline scenario. Nevertheless, EDB analysts expect that in the near future the currencies of most countries in the region will strengthen and move to a more stable dynamics

EDB Forecast. Main Macroeconomic Indicators of EDB Member States (Baseline Scenario)

Indicator	2023	2024 F	2025 F	2026 F	2027 F
Republic of Armenia
GDP in constant prices, %	8.3	6.0	5.5	5.3	5.0
Inflation (end of period), % y-o-y	-0.6	1.8	3.1	3.0	2.5
Interbank lending rate (year average), %	10.4	8.3	7.0	6.8	6.0
AMD/USD exchange rate (year average)	393	392	402	405	407
Republic of Belarus
GDP in constant prices	3.9	4.3	2.6	1.9	1.5
Inflation (end of period)	5.8	5.9	6.6	7.9	7.4
Refinancing rate (year average), %	9.5	9.5	9.5	9.5	9.5
BYN/USD exchange rate (year average)	3.00	3.25	3.38	3.57	3.81
Republic of Kazakhstan
GDP in constant prices	5.1	4.5	5.5	5.5	5.5
Inflation (end of period)	9.8	8.5	7.3	5.6	5.1
TONIA rate (year average), %	16.4	14.0	12.3	9.5	8.0
KZT/USD exchange rate (year average)	456.3	466	486	492	503
Kyrgyz Republic
GDP in constant prices	9.0	9.4	8.7	6.4	5.6
Inflation (end of period)	7.3	5.6	5.0	5.5	6.3
7-day repo (year average), %	11.4	7.6	5.2	7.1	9.0
KGS/USD exchange rate (year average)	87.9	87.1	87.4	89.7	93.1
Russian Federation
GDP in constant prices	3.6	4.1	2.4	1.7	1.5
Inflation (end of period)	7.4	8.5	6.5	5.6	4.5
Policy rate (year average), %	9.9	17.5	22.1	15.5	11.5
RUB/USD exchange rate (year average)	85.2	92.5	104	106	109
Republic of Tajikistan
GDP in constant prices	8.3	8.4	8.4	8.0	7.4
Inflation (end of period)	3.9	3.9	5.8	6.7	6.8
Refinancing rate (year average), %	10.5	9.2	9.2	9.9	10.6
TJS/USD dollar exchange rate (year average)	10.8	10.8	11.0	11.5	12.1

More details on the Macroeconomic Outlook are available on the EDB website.

Additional Information

The Eurasian Development Bank is an international financial institution investing in Eurasia. For more than 17 years, the EDB has worked to strengthen and expand economic ties and foster comprehensive development in its member countries. The EDB's charter capital totals US $7 billion. Its portfolio consists principally of projects with an integration effect in transport infrastructure, digital systems, green energy, agriculture, manufacturing, and mechanical engineering. The Bank adheres to the UN Sustainable Development Goals and ESG principles in its operations.

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