Papers by Aleksei Kuznetsov
ERN: Political Economy (Topic), 2021
This report assesses the potential effects of integration of the Republic of Uzbekistan with the ... more This report assesses the potential effects of integration of the Republic of Uzbekistan with the Eurasian Economic Union (EAEU), and lists the most promising areas of cooperation between the current Union member countries and Uzbekistan. The authors have examined the key indicators of social and economic development of Uzbekistan and the main areas of trade and investment cooperation between the republic and the EAEU, and have presented an in-depth review of two sectors that are critical for Uzbekistan and for Central Asia as a whole: transport and the water and energy complex. The authors have concluded that, inasmuch as Uzbekistan is a large and strategically positioned Central Asia player, resolution of regional development issues without its participation will not make much progress. Deeper economic integration between Uzbekistan and the EAEU may become a major driver of investment and trade cooperation.
EDB Macroeconomic Outlook 2024–2026, 2023
The Eurasian Development Bank has published its Macroeconomic Outlook, presenting a preliminary o... more The Eurasian Development Bank has published its Macroeconomic Outlook, presenting a preliminary overview of economic developments in the Bank’s member states for 2023, along with key macroeconomic projections for 2024, as well as 2025 and 2026.
EDB Macroeconomic Outlook, 2023
The Eurasian Development Bank has published its Macroeconomic Outlook for 2023–2025. This analysi... more The Eurasian Development Bank has published its Macroeconomic Outlook for 2023–2025. This analysis summarises economic developments in the Bank’s member states in early 2023 and provides key macroeconomic projections for the region’s countries until the end of the year and for 2024–2025.
2018 saw the highest economic growth rate since 2014. GDP increased by 7.3% after 7.1% in 2017. A... more 2018 saw the highest economic growth rate since 2014. GDP increased by 7.3% after 7.1% in 2017. As a result, the economy continued along its steady growth acceleration path, somewhat above the potential level. Investment and consumer activity was the key factor behind the growth acceleration in 2018. The State infrastructural development programs continue to support investment demand and lay the basis of economic growth. The revival of domestic demand in 2018 was partially the effect of households’ deferred demand as inflation reached a record low. In the 2nd half of 2018, inflation reached the target range of 7% (±2 pp); it was 5.4% at the end of the year. The inflation trends were shaped by the world food market, the base effect in the fruit and vegetables sector, and transport and electricity tariff policy. The current account deficit expanded as the negative goods and services balance widened, partially due to growing imports of machines and equipment for the implementation of l...
Institutions & Transition Economics: Macroeconomic Issues eJournal, 2017
Russian Astract: Стабилизация сырьевых цен и как следствие стабилизация национальных валют в боль... more Russian Astract: Стабилизация сырьевых цен и как следствие стабилизация национальных валют в большинстве стран ЕАБР в I квартале 2017 г. создают благоприятную основу для восстановления взаимного товарооборота региона ЕАБР. Достаточно отметить, что все страны ЕАБР показали рост взаимного товарооборота в I квартале текущего года, при этом примечательно, что самые высокие темпы роста товарооборота наблюдались в Казахстане (почти 41% г/г), а также в Российской Федерации (33,7% г/г). Значительные темпы роста товарооборота со странами ЕАБР Республики Беларусь (30,2% г/г) могут получить дополнительный импульс после достижения российско-белорусского соглашения относительно цен на энергоносители и поставок энергоносителей. Улучшение ситуации во взаимосвязях стран региона также наблюдалось в области денежных переводов мигрантов – по итогам I квартала 2017 г. денежные переводы в Кыргызстан превысили 54% год к году, в то время как соответствующий показатель в Армении составил 14% г/г. Обратная ...
Economic Growth eJournal, 2018
The extent of global protectionism risks became obvious in the first half of 2018. The US’s escal... more The extent of global protectionism risks became obvious in the first half of 2018. The US’s escalating trade dispute with the EU and China creates considerable risks to global economic growth, which brings additional risks of an energy price correction for the EDB countries. Apart from external economic risks, weakening existing growth drivers and the need for new sources to boost economic development become new and growing challenges facing the EDB countries. One of the possible steps under the present conditions can be some softening in fiscal policy. Prospects of a fiscal stimulus emerged this year with the Russian President’s executive orders issued in May to provide additional financing to high-priority sectors. Additional expenditures can amount to up to RUB 8 trillion by 2020. Amid growing energy prices, there was an increase in spending in Kazakhstan in 1Q 2018, by 13.5% YoY, compared to almost zero growth in the same period of the previous year. At the same time, social exp...
SSRN Electronic Journal, 2018
The Russian version of this paper can be found at <a href='http://ssrn.com/abstract=320634... more The Russian version of this paper can be found at <a href='http://ssrn.com/abstract=3206347'>http://ssrn.com/abstract=3206347</a>. The extent of global protectionism risks became obvious in the first half of 2. The US’s escalating trade dispute with the EU and China creates considerable risks to global economic growth, which brings additional risks of an energy price correction for the EDB countries. Apart from external economic risks, weakening existing growth drivers and the need for new sources to boost economic development become new and growing challenges facing the EDB countries. At the same time, the potential to stimulate economic activity with monetary policy tools has declined due to unprecedented low inflation and base rates of the largest EDB countries approaching neutral values. Resumed volatility in exchange rates and continuous medium-term inflation risks (high inflationary expectations) create additional obstacles to monetary stimuli in the short term. These conditions compel most of the EDB countries to look for new sources of growth to take advantage of favorable external conditions and accelerated integration processes taking place in the Eurasian region. One of the possible steps under the present conditions can be some softening in fiscal policy. Prospects of a fiscal stimulus emerged this year with the Russian President’s executive orders issued in May to provide additional financing to high-priority sectors, especially to those that support the development of human capital. According to the Russian Ministry of Finance’s estimates, additional expenditures can amount to up to RUB 8 trillion by 2020. Amid growing energy prices, there was an increase in spending in Kazakhstan in 1Q 2, by 13.5% YoY, compared to almost zero growth in the same period of the previous year. At the same time, social expenditures ( 20% YoY), particularly on healthcare ( 23.6% YoY), outpace overall expenditure growth. However, using the budget mechanism to stimulate economic activity has some limitations, including budget rules established in oil exporting countries, such as the RF. On the other hand, some countries, like Belarus and Armenia, need to reduce government debt. An increase in spending amid a rise in commodity prices may also increase EDB countries’ dependence on global economic conditions. Thus, in order to find additional growth drivers, the EDB countries have to take measures to increase efficiency and labor productivity in their economies and to improve the investment climate. It must be noted that the EDB countries have been actively adopting medium-term and long-term programs and strategies over the last year. This particularly relates to Kazakhstan, where a number of programs have been announced. The industrialization program progressed in 2017 and a comprehensive program called Digital Kazakhstan was approved. The Kazakhstan Strategic Development Plan to 2025 was approved in 2. It aims for high-quality and sustainable economic development and to raise living standards to the level of OECD countries. In March 2, the President of Kazakhstan announced five social initiatives: to make mortgages more affordable and higher education more available, to ease the tax burden on the most vulnerable part of the population, to develop microfinancing and to connect more households to gas. The Russian Ministry of Economic Development is developing measures to improve the business climate. The Transformation of the Business Environment Plan is reported by RBC to include 14 initiatives to protect property rights, develop human capital, grow productivity and improve corporate governance. Diminishing the share of the shadow economy can be a potential economic growth driver for the EDB countries. According to the IMF, the shadow economy in the EDB countries constitutes 32.8% of Kazakhstan’s GDP, 30.1% of Kyrgyzstan’s GDP, 32.4% of Belarus’s GDP, 37.8% of Tajikistan’s GDP, 36% of Armenia’s GDP, and 33.7% of Russia’s GDP. These estimates do not correspond to the countries’ official data due to differences in assessment methods applied. According to the Kazakhstan Statistics Committee, the shadow economy amounted to 25.8% of Kazakhstan’s GDP in 2016 and 23.8% of Kyrgyzstan’s GDP (the data for 2015 does not cover the agricultural sector). No matter how you calculate it, though, the share of the shadow economy is high. However, all conditions currently exist to decrease it. By decreasing the shadow economy, it will be possible to increase budget revenues, distribute revenues more equally, and improve the business climate and economy in general. Domestic growth drivers become more important for the EDB countries, considering increasing global risks. Reforms to boost economic activity are better to implement when global economic conditions are relatively favorable. Such measures can be further coordinated by the EDB countries to benefit from the synergy from regional economic integration, which has become a key growth…
SSRN Electronic Journal, 2018
Mutual trade between Eurasian Economic Union (EAEU) countries is one of the key indicators of the... more Mutual trade between Eurasian Economic Union (EAEU) countries is one of the key indicators of the region’s integration processes. At the same time, the intensification and diversification of mutual trade is an important driver in increasing potential long-term economic cooperation between EAEU countries.<br><br>This research includes an analysis of EAEU foreign trade with third countries as well as mutual trade during the early years of the formation of the EAEU. It not only reveals the structure of existing trade flows, but also determines potential growth areas for the development of inter-industry trade between the regional association’s member countries.<br><br>Analysis of trade flows shows that exports from EAEU member countries to third countries are less diversified than those in mutual trade. Commodities are still the most competitive exports for EAEU countries on foreign markets. In 2017, there were signs of increased commodity diversification in mutual trade. However, in terms of geographical distribution, bilateral trade is still built around the Russian market. In this context, the potential for expanding integration is concentrated in the development of intra-industry trade. According to authors estimates, the greatest potential for increasing mutual intra-industry trade exists in the Republic of Kazakhstan, the Kyrgyz Republic and the Republic of Armenia. Inside the union, there is an opportunity to expand mutual trade in products from the textile and chemical industry, metals and products thereof, processed forestry products, as well as machinery and equipment.
SSRN Electronic Journal, 2018
<b>Russian Abstract:</b> В 2018 г. страны – участницы ЕАБР столкнулись с серией вызов... more <b>Russian Abstract:</b> В 2018 г. страны – участницы ЕАБР столкнулись с серией вызовов для макроэкономической стабильности в регионе. Основные риски были связаны с замедлением глобального экономического роста, нарастанием протекционистских тенденций в мировой торговле и повышенной волатильностью на развивающихся рынках. Кроме того, макроэкономическая ситуация в регионе находилась под воздействием усилившейся геополитической напряженности.<br><br>Несмотря на нарастание внешних вызовов, макроэкономическая ситуация в регионе оставалась стабильной. Важными факторами стали ориентация фискальной политики в большинстве стран – участниц ЕАБР на цели придания большей устойчивости экономическому развитию и реализация сбалансированной монетарной политики. Другим фактором улучшения экономической ситуации в регионе стала наблюдавшаяся в течение большей части 2018 г. благоприятная ценовая конъюнктура на рынке нефти.<br><br>Во всех государствах ЕАБР в 2018 г. отмечаются положительные темпы экономического роста, который, по нашим оценкам, в целом по региону составит 2,0% по итогам 2018 г. Инфляция достигла рекордно низких уровней и к концу 2018 г. не превысит целевых ориентиров центральных/национальных банков. Взаимная торговля стран – участниц ЕАБР выросла на 12,5% по сравнению с январем – сентябрем 2017 г.<br><br>Экономический рост в странах региона в 2017–2018 гг. был во многом обеспечен смягчением монетарных условий. Вместе с тем цикл восстановления экономической активности завершается, а инфляционные риски находятся на высоком уровне. В совокупности это ограничивает потенциал дальнейшего стимулирования экономики со стороны монетарной политики. В условиях нарастания внешних рисков все более актуальным становится поиск новых источников устойчивого роста, в том числе за счет преобразований, направленных на повышение эффективности экономик и улучшение инвестиционного климата.<br><br>В рамках специального доклада к макрообзору коллектив авторов Евразийского фонда стабилизации и развития на примере Армении приводит свои рекомендации в отношении мер экономической политики, направленных на преодоление структурных и институциональных ограничений экономики. Проведенный анализ структурных разрывов в Армении позволил определить направления реформ, которые успешно реализуются в стране, равно как и те направления, по которым наблюдается отставание в реализации. Представленный в исследовании инструментарий является универсальным и может быть использован для разработки адресных рекомендаций в отношении мер структурной экономической политики.<br><br>В ряде государств региона в 2018 г. власти выступили с инициативами структурных преобразований. Правительством Российской Федерации анонсирован пакет структурных изменений, направленных на стимулирование устойчивого роста инвестиционной активности и решение долгосрочных социальных задач. В Казахстане инициативы президента, озвученные весной и осенью 2018 г., во многом ориентированы на повышение благосостояния населения страны посредством улучшения деловой среды и развития человеческого капитала. Такого рода преобразования могут способствовать повышению качества экономического роста Казахстана в долгосрочной перспективе за счет его большей устойчивости и инклюзивного характера экономической модели развития.<br><br><br><b>English Abstract:</b> In 2018, the EDB member countries faced a number of challenges to regional macroeconomic stability. The main risks resulted from the global economic slowdown, growing protectionist trends in world trade and increased volatility in developing markets. Higher geopolitical tensions also had an impact on the regional macroeconomic situation.<br><br>Despite the growing external challenges, the macroeconomic situation remained stable in the region, with most EDB countries’ fiscal policies aimed at achieving more sustainable economic growth and a balanced monetary policy. The favorable oil price during most of 2018 was another factor behind the improvement in the region’s economy.<br><br>All the EDB member countries recorded positive growth rates in 2018, which we estimate at 2.0% overall. Inflation reached a record low and will stay within the central banks’ target ranges for 2018. The EDB member countries’ mutual trade grew by 12.5% versus January to September 2017.<br><br>The 2017 and 2018 economic growth in the region was significantly assisted by eased monetary policies. Yet the recovery cycle is ending, while the inflationary risks are high. These factors combine to limit monetary policy’s ability to continue stimulating the economy. With the external risks mounting, it is increasingly important to find new sources of sustainable growth, in particular, by means of reforms intended to raise the economies’ efficiency and improve the investment climate.<br><br>In the special report attached to this macro review, the team of authors of the Eurasian Fund for Stabilization and Development gives recommendations concerning economic policy measures that might…
SSRN Electronic Journal, 2017
SSRN Electronic Journal, 2017
The stabilisation of commodity prices and the resultant stabilisation of national currencies in m... more The stabilisation of commodity prices and the resultant stabilisation of national currencies in most EDB countries in 1Q 2017 create a favourable basis for a recovery in trade in the EDB region. Suffice it to note that all EDB countries showed growth in mutual trade turnover in 1Q of the year; notably, the highest turnover growth rates were observed in Kazakhstan (nearly 41% y-o-y) and the Russian Federation (33.7% y-o-y). The considerable growth rates in trade turnover between the Republic of Belarus and EDB countries (30.2% y-o-y) may receive additional impetus now that the Russian-Belarusian agreement on the prices and supplies of energy commodities has been concluded. The situation with the countries’ mutual ties also improved as regards migrants’ remittances: growth in remittances to Kyrgyzstan exceeded 54% in 1Q 2017, while in Armenia this indicator was 14% y-o-y in 1Q 2017. The situation was the opposite in Tajikistan, where migrants’ remittances in 4Q 2016 decreased by 39% compared with the same period the previous year. In this review, our special report focuses on macroeconomic ties among the EDB countries and the economic growth transmission channels, mainly as regards foreign trade and remittance flows. Our study testifies to a considerable role of these factors in the regional countries’ economic recovery, but we also note that the region’s economies remain highly vulnerable to external shocks, and to energy price fluctuations above all. Apart from trade turnover and remittance growth, this year’s recovery in economic cooperation between the countries has been boosted by the signing of the Customs Code by the EAEU countries, the agreement reached on the elimination of obstacles to the free movement of goods, services, capital, and labour in the EAEU (the White Book), the instruments of the EEC Council and Collegium aiming to create a single Eurasian pharmaceuticals market that enter into force in May 2017, the energy price agreement reached between Russia and the Republic of Belarus, and the signing of instruments between the Republic of Kazakhstan and the Kyrgyz Republic on the provision of technical and financial assistance to Kyrgyzstan in adapting its economy to membership of the Eurasian Economic Union. Also notable are the issue of a new USD 300 million tranche of the EFSD loan to the Republic of Belarus and the decision of the Russian Federation to write off Kyrgyzstan’s USD 240 million debt at once. Further easing of monetary policy based on a considerable slowdown in inflation, which has reached record-low levels in the Russian Federation, is additional potential stimulus for accelerated economic growth in most EDB countries this year. In addition to the interest rate reduction effect, investment growth in the EDB countries may be supported by an inflow of foreign direct investment, given both its relatively low base in the past few years and an improving external background. That said, the opportunity to deploy a public budget boost is still limited, as the EDB countries’ budgets remain insufficiently adapted to lower and more volatile commodity prices. Russia’s economic growth outlook for 2017 has improved from 0.8% to 1.3%. The projection change was influenced by the first quarter’s economic data and a revised oil price projection that took into account the first quarter’s trends in world energy prices. The improvement in the Belarusian GDP projection from minus 0.5% to positive 1.3% over 2017 is caused by higher than expected economic activity recovery rates in the 1st quarter and by the agreement reached on gas prices and oil supply from the Russian Federation. Kazakhstan’s improved GDP outlook is caused by stronger external demand and by the expansion of the State budget deficit with a view to revitalising the banking system. More optimistic assumptions concerning the foreign economic situation and a revised fiscal boost were the main factors behind the improved GDP outlook for Kyrgyzstan. Tajikistan’s economic growth projection was revised downwards as its banking sector situation deteriorated. A key risk for the remainder of 2017 is renewed volatility in the commodity markets after a period of strengthening exchange rates of some EDB countries’ currencies. Early May developments in both the Russian and Kazakh financial markets showed that, after a considerable strengthening in the preceding months, the national currencies have become more sensitive to increased volatility in oil prices. With some developing markets’ currencies overvalued, the oil price volatility factor may be compounded by increased Fed rates, which may additionally pressurise developing countries’ currencies. We expect that, given the increased external risks, the Central Bank of the Russian Federation may harden its rhetoric and slow the reduction in the key rate in the coming months.
SSRN Electronic Journal, 2017
SSRN Electronic Journal, 2018
World economic growth in 2017 was driven by an increase in business activity in both developed an... more World economic growth in 2017 was driven by an increase in business activity in both developed and key developing economies. In the context of falling deflation risk, as well as an improvement in unemployment – an important macroeconomic parameter – there has been a trend towards normalization of the US Federal Reserve System's monetary policy. The European Central Bank is also moving in the direction of reducing its quantitative easing program. Thus, monetary policy's supporting effect is gradually ending, but the system retains a lot of fiscal incentives to help accelerate economic growth. The rise in investment and the recovery of world trade in developed economies was the third component driving higher than expected growth in 2017. The world's positive economic growth trend drove a return to favorable conditions on world commodity markets. The average price for Brent crude in 2017 grew by 23.5% YoY. Prices for precious metals rose by 0.4% on average for the year, and non-precious metals grew by an average of 24.4%. Monetary policy in the main global economies will cease to be the main factor in supporting growth, but in Russia and other EDB countries, given current conditions, there is a chance to stimulate economic growth due to unprecedented low inflation and the possibility of a further lowering of the key rate. A softening of monetary policy in most of the region's countries will support investment activity. If a favorable external environment is maintained, positive trends can be expected to develop, including the restoration of foreign investment and growth of mutual trade between EDB countries. The increase in labor migrants' remittances will stimulate domestic demand in the region's economies, whose balance of payments largely depends on these transfers.
SSRN Electronic Journal, 2018
В начале августа внешние условия для стран ЕАБР ухудшились на фоне дальнейшей эскалации торговых ... more В начале августа внешние условия для стран ЕАБР ухудшились на фоне дальнейшей эскалации торговых ограничений и санкционного давления со стороны США. Дополнительным негативным фактором стал рост волатильности на развивающихся рынках, прежде всего в Турции, где национальная валюта продемонстрировала рекордное обесценение. Среди стран ЕАБР основное давление на себе испытали обменные курсы России и Казахстана – российский рубль в августе превышал 68,8 рублей за доллар США, отклонившись от уровня начала месяца на 9,1%, в то время как максимальное обесценение тенге ограничилось 4,3%. Для нейтрализации негативных внешних факторов ЦБ РФ приостановил закупки валюты для Минфина, но с 17 августа возобновил приобретение валюты, сигнализируя таким образом о снижении рисков. Следует отметить: несмотря на трудности для рубля, макроэкономические индикаторы российской экономики отличаются в выгодную сторону от показателей Турции и большинства других развивающихся рынков. В настоящее время в российской экономике наблюдаются двойные профициты – положительный бюджетный баланс подкрепляется накоплением фискальных и валютных резервов в условиях благоприятных цен на нефть. При этом инфляция близка к историческим минимумам на уровне немногим выше 2%. В рамках специального доклада к макрообзору коллектив авторов Евразийского фонда стабилизации и развития (ЕФСР) приводит свои оценки долговой устойчивости ряда стран ЕАБР/ЕФСР. Проведенный анализ свидетельствует о том, что рост долга в этих странах за 2009–2017 гг. во многом является следствием активного применения фискального стимула, при котором расходы бюджета поддерживались за счет заимствований правительства, «компенсирующих» выпадающие вследствие экономического спада налоговые доходы. В исследовании были проанализированы риск-факторы, которые могут повлиять на долговую устойчивость экономик региона в среднесрочном периоде, и сделан ряд выводов. Что касается экономического роста в регионе, то прогноз для стран – участниц ЕАБР на 2018 г. остался без изменений и составляет 2,1%. Основным драйвером роста в большинстве стран региона в текущем году стало расширение потребительского спроса на фоне увеличения денежных доходов населения и роста кредитования. Наблюдаемое по итогам II квартала замедление инфляционных процессов нашло отражение в пересмотре прогнозов по инфляции в сторону снижения в 2018 г. Так, прогноз по инфляции в Армении снижен с 4,1% до 2,2%, в Беларуси – с 6% до 5,1% и Таджикистане – с 4,2% до 2%. При этом в 2019 г. прогнозируется некоторое превышение инфляцией целевого ориентира в России до 4,9%.
Russian Abstract: Прошлый год для стран ЕАБР начался непросто – на фоне резкого снижения цен на н... more Russian Abstract: Прошлый год для стран ЕАБР начался непросто – на фоне резкого снижения цен на нефть финансовые рынки и обменный курс испытывали повышенную волатильность. Тем не менее по итогам года страны региона продемонстрировали стабилизацию обменного курса, а в ряде случаев и значительное укрепление национальной валюты. При этом инфляция в странах ЕАБР на конец 2016 г. достигла исторического минимума в 5,8% по сравнению с 12,8% на конец 2015 г. Важно отметить, что снижение инфляции наблюдалось во всех шести странах – участницах ЕАБР, самое значительное снижение инфляции продемонстрировали крупнейшие экономики региона – Россия и Казахстан. В течение 2017 г. наиболее вероятен инерционный сценарий продолжения восстановления экономики стран ЕАБР и снижения инфляции на фоне стабилизации внешних условий. Мы прогнозируем рост экономик ЕАБР на 0,9% с дальнейшим ускорением до 1,5% в 2018–2019 годах. При этом сохраняются возможности для снижения инфляции, которая, по нашим оценкам, сниз...
SSRN Electronic Journal, 2019
This Special Report examines the pass-through effect of the exchange rate on inflation in member ... more This Special Report examines the pass-through effect of the exchange rate on inflation in member countries of the Eurasian Development Bank. Special attention is paid to assessing pass-through effect changes that occurred in recent years and to analyzing asymmetric and non-linear relationships between exchange rates and inflation in the region’s countries. The results obtained confirm the exchange rates’ significance for inflation movements in EDB economies. That said, in 2015-2018 the exchange rate’s pass-through effect on inflation decreased in magnitude in most of the States under review, possibly on account of the monetary and exchange rate policy reforms implemented – in particular, a switch to a more flexible exchange rate and more effective monetary policies. In a number of Eurasian Development Bank member countries, the pass-through was noted to have an asymmetric effect, with consumer prices being more responsive to weakening than to strengthening of their national currencies.
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Papers by Aleksei Kuznetsov