ArmInfo.The fall in the aggregate GDP of the countries of the Eurasian Economic Union (EAEU, which includes Russia, Belarus, Kazakhstan, Armenia and Kyrgyzstan) following the results of the current year due to the coronavirus pandemic can make up from 3.2% to 7.2% depending on the scenario of events.
According to the Prime Economic Information Agency, this is stated in the report of the Eurasian Economic Commission (EEC) "Mechanisms for responding to threats to macroeconomic stability in the context of the global economic crisis caused by the pandemic." According to the source, the EEC considered two scenarios for the development of the situation: "recession" and "depression". Both are characterized by a number of features, and the main distinguishing criteria here are the intensity of the pandemic and the duration of the restrictive measures. Thus, in a "recession", the coronavirus pandemic will be limited to the third quarter of the year, and restrictive measures will have a positive effect and will be canceled during the second and third quarters. In case of "depression", the development of a pandemic will be more prolonged, moreover, a second outbreak of infection is possible in the coming year. At the same time, restrictive measures will remain until the end of this year, and then the introduction of restrictions will occur more decisively. "The fall in GDP of the EAEU member states in 2020 due to a pandemic can range from 3.2% (" recession " scenario) to 7.2% (scenario" depression "). The consequences of the coronavirus pandemic and falling prices for key export commodities will lead to weakening of domestic consumer and investment demand and will be constrained by the expansion of net exports of EAEU member states, "the report said. "In the recession scenario, the stabilization of the situation in the global economy and commodity markets, as well as the expected implementation of internal structural transformations in a number of countries in the region will become key factors in increasing the GDP growth rate of the EAEU member states in 2021-2022," the report also says . It is noted that the central banks of most countries of the Union can go to the cycle of easing monetary policy in 2020 in the face of weak domestic demand and its disinflationary effect in the medium term. At the same time, as the situation in the financial markets stabilizes, the Commission predicts a reduction in key rates in Armenia, Belarus, Kazakhstan and Russia, "which may fall below neutral levels in 2021 to stimulate economic activity." At the same time, the weakening of the local currency, which will affect the value of imported goods, will make the main contribution to inflation in countries, the EEC points out. "At the same time, the effect of the transfer of exchange rate dynamics on inflation in the current year is expected to be limited. According to forecasts, the degree of influence of the exchange rate on inflationary processes in most EAEU member states has declined in recent years due to the transition to floating exchange rate regimes and improved balance monetary policy, "the report says.
"The projected weakening of domestic demand and a reduction in price increases in countries that are major trading partners will have a significant disinflation effect. The greatest impact of these factors is expected in 2021, which will lead to a significant slowdown in inflation in most EAEU member states," the report adds. In the "depression" scenario, it is assumed that negative trends in the global economy will only worsen, which may cause a further fall in prices for key export goods of the EAEU countries, primarily energy raw materials and metals. "In connection with the revision of budget policy parameters, an increase in the public sector budget deficit is expected, as well as the majority of the member states (with the exception of Belarus) exceeding the established criterion for the EAEU convergence on the budget deficit of 3% of GDP," the EEC emphasizes. "Fiscal incentives will be limited as a result of the loss of a significant part of income due to the forced restriction of business activity, lower prices and volumes of key export positions against the backdrop of a recession in the global economy, which has a high risk of becoming depressed," the report also said. Because of this, in the countries of the Union, the growth of the debt of the general government sector is expected and its excess of the upper limit of 50% of GDP by all countries except Kazakhstan and Russia. Nevertheless, according to the forecasts of the commission, as the situation stabilizes, the EAEU states will return to budget policy within the framework of established budget rules.
