Eurasian Integration Yearbook 2012

Elvira Kurmanalieva, Konstantin Fedorov. “The Impact of GlobalFinancial and Economic Instability on the CIS”The Economics of the Post-Sovietand Eurasian IntegrationAfter the devaluation of the Belarusian currency in spring and summer, thegovernment’s measures and the urgent assistance from the EurAsEC Anti-CrisisFund and other donors have significantly stabilised its economy and helpedto stop the drastic weakening of the national currency and restrain growth inprices.The scenario for the nearest years suggests that global imbalances will continueto be eliminated. The growth in developed markets will remain low until thepopulation decreases its debts, which could require several years. In eliminatingglobal imbalances, Western countries with high government or private debt willchange the structure of their economies by strengthening export-oriented sectorsand reducing consumption. At the same time, the dynamically developing Asiancountries – China in particular – will increase their domestic consumption tothe detriment of their export potential. This process won’t be painless for theWest, or for the Asia-Pacific, as the economic correction it suggests is verysignificant.However, there are grounds to believe that the global economy will retaininsignificant, but stable growth, as a slowdown in the development of certaineconomic sectors or certain countries will be compensated by acceleratedgrowth in other sectors and countries. The IMF and the World Bank suggest thatthe economic unevenness of developed and developing countries will graduallybe eliminated. According to their recent forecasts 2 , the global economy willhave a growth of 2.5-3.5% in 2012, with an insignificant acceleration to 3-4%in 2013-2014. The growth in developing economies will slow down slightlyin 2012, and accelerate to 6% on average in 2013-2014, while, in developedcountries, it will remain at a relatively low level of 1.4-2.5%. The most probablescenario is that the eurozone authorities will retain control over the situationaround problematic countries through debt relief and support of debtors.However, the fear of recurrences of the debt crisis in Europe will continue toaffect the world’s economic activity.For the CIS countries this scenario is rather favourable, since Asian developingmarkets will still demand raw materials. In addition, raw materials prices will besupported by investment demand underpinned by soft monetary policies in theWest and the weakness of main reserve currencies, primarily the US dollar, inthe nearest years. EDB forecasts that if Brent oil prices remain high (at $115 perbarrel), the region will grow by 4-5% on average in 2012-2013. However, themain risks, which we described above, threaten higher growth rates in the CISeconomies. For this reason an alternative scenario has been prepared, whichsuggests that oil prices will fall to $90 per barrel on average in 2012 and 2013.This will slow down the growth of the CIS economies to 3.2-3.9%.2IMF (2012) World Economic Outlook, April. World Bank (2012) Global Economic Prospects, June.Eurasian Development Bank125