ArmInfo. The basis for restoring the economic growth of the countries of the EDB is becoming more stable and diversified as, along with the restoration of investment and the increase in exports, there is also stabilization and recovery in the consumer sphere.
This is stated in the monthly Macro overview of the Eurasian Development Bank. According to analysts of the bank, among the tendencies of the past few months in the development of the economy of the EDB countries, it can be noted that the situation in the consumer segment improved, which was observed practically in all countries of the region. Thus, in July, all the countries of the region demonstrated positive growth rates of retail trade turnover: in Russia - 1% y/y, in Belarus - 4.9% y/y, in Armenia - 3.2% y/y, in Kazakhstan - 9,2% y/y, in Kyrgyzstan - 3.1% y/y, in Tajikistan - 5.2% y/y. In part, this kind of dynamics evolved both through the restoration of wages and the growth of lending activity in the consumer segment. At the beginning of August, consumer lending increased in Belarus by 15.4% y/y, in Armenia by 12.6% y/y, in Kazakhstan by 6.2% y/y, in Kyrgyzstan by 36.7% y/y, in Russia by 7.1% y/y. At the same time, nominal wages grew in all EDB countries in annual terms and only in Kazakhstan there were negative growth rates in real terms in relation to the corresponding period of 2016. The improvement of economic dynamics in EDB countries is reflected in the improvement of forecasts on ratings, which was already announced earlier on the Russian economy and is now reflected in other countries of the region. Thus, Moody's confirmed Kazakhstan's sovereign rating at the level of and raised the country's rating outlook from negative to stable. The experts of the agency explain the increase in the forecast of the country rating by the fact that the economy, budget and banking system of Kazakhstan have adapted to the structural decline in oil prices. The rating agency also positively estimated the recapitalization of the banking system, launched in the country. In addition, Tajikistan received the first credit ratings for the purpose of placing Eurobonds. Moody's agency rated Tajikistan's credit rating at (B3, Outlook Stable), while S & P rated Tajikistan's credit rating at B-/stable. Fitch Ratings has maintained the long-term issuer default ratings of Belarus in foreign and local currency at , changing the forecast to positive from stable. At the same time, the agency notes improvement in Belarus' access to external financing and an increase in international reserves, which reduces financial risks for 2017 and 2018. The safety factor for economic growth and restoration of consumption of EDB countries is in the conditions of maintaining higher rates in the largest countries of the region, Achieving record low inflation levels will create opportunities for strengthening credit activity. From the side of budgetary policy, the reserves for stimulating the consumer sector look somewhat more limited, but here, on the horizon of the next half-year, measures are possible to increase social payments and support the restoration of real incomes of the population. An important factor of support for the consumer is the stabilization of exchange rates and a reduction in inflation, an increase in the remittances of migrants, and a relatively low level of unemployment in the largest countries of the region (Russia and Kazakhstan). The key risks to the recovery dynamics of consumption are external shocks associated with the price situation on the world commodity markets, as well as the persistent problems of bad debts in the banking sector of a number of EDB countries.
Noting the trends in the Armenian economy, EDB analysts drew attention to the continued economic activity, as evidenced by the dynamics of the economic activity index, whose growth in July rose to 7% by July 2016 (5.1% y/y a month earlier). Since the beginning of the year, the growth rate was 6.2% y/y (3.6% a year earlier). The main positive contribution in July 2017 against the background of the restoration of external and internal demand was made by industry (an increase of 14.3% y/y), trade (10.5% y/y) and the volume of services (17.2% y/y). In the field of negative values, the dynamics of agriculture returned, the fall in which in July amounted to 4.3% y/y. In January-July 2017, agricultural output fell by 2.1% compared to the same period in 2016, which is mainly due to climatic factors. The fall in construction continues to slow down and in July was 3.9% y/y (a drop of 4.4% y/y a month earlier). Retail turnover continues to increase (an increase of 3.2% y/y in July). Support for consumer activity continues to increase the volume of remittances, growth of salaries and loans to the population. Since the beginning of the year, the increase in retail turnover was 5.7% compared to the same period in 2016.
Against the backdrop of growth in economic activity, the trade balance deficit continues to expand, which for July increased by $ 149 million to $ 976.6 million from the beginning of the year (deficit of $ 708.3 million in January-July 2016). The main reason is the high growth of imports (an increase in July by 45.1% y/y). At the same time, export volumes continue to show double-digit growth rates, having increased by 25% y/y in July.
The slowdown in annual inflation for July 2017 to 0.9%, from 1.1% a month earlier, was supported by a greater seasonal decline in prices for agricultural products than in the same month of 2016. In July, the neutral impact on the level of prices from imported inflation remained. In the remaining months of this year, the gap between the actual level of inflation and the Central Bank's target point is expected to narrow. According to the EDB's forecasts, inflation at the end of 2017 will be 2.3%. To reach the target trajectory for inflation, the Central Bank Board on August 15 made a decision about keeping the refinancing rate at 6%. In the absence of external and internal shocks, the Central Bank allows the preservation of the refinancing rate at the current level in the short term. Accelerating the growth of remittances.
According to the Central Bank of Armenia, the increase in remittances of individuals in USD terms increased in July 2017 to 20.3% y/y after 9.1% y/y a month earlier. In total in January-June 2017, the volume of money transfers in dollar terms exceeded the level of the same period in 2016 by 17%. The positive dynamics of remittances is expected to remain until the end of 2017, which will continue to contribute to the growth of consumer and investment activity.