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EDB Macroreview, December 2018. Macroeconomic Stability Tested




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. 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. 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. 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. In the special report the team of authors gives recommendations concerning economic policy measures that might help overcome an economy’s structural and institutional limitations, taking Armenia as an example. Analysis of the structural gaps existing in Armenia allows us to identify the areas of reform that are being successful – as well as those which are lagging. In 2018, some member-states’ authorities initiated structural reforms. The Government of the Russian Federation announced a package of structural changes intended to stimulate sustainable growth of investment activity and pursue long-term social objectives. In Kazakhstan, presidential initiatives announced in the spring and fall of 2018 are largely intended to enhance the population’s welfare by improving the business environment and developing human capital. Such reforms may help improve the quality of Kazakhstan’s economic growth in the long run by making it more sustainable and based on an inclusive model of economic development.

Suggested Citation

  • Kuznetsov, Aleksei & Berdigulova, Aigul, 2018. "EDB Macroreview, December 2018. Macroeconomic Stability Tested," Working Papers 2018-4, Eurasian Development Bank, Chief Economist Group.
  • Handle: RePEc:ris:eabrwp:2018_004

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    macroeconomy; forecasting; Eurasia; EAEU countries; economic growth; monetary policy;
    All these keywords.

    JEL classification:

    • E17 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Forecasting and Simulation: Models and Applications
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E66 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General Outlook and Conditions
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development

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