Global economic recession risks remain significant - EDB

ArmInfo.February 2023 saw signs that the risk of recession in the global economy had subsided. Global business  activity livened up in February compared to the previous month, with the composite PMI rising to 52.1 points - above the 50-point  threshold for the first time since July 2022. China's abandonment of its zero-COVID policy has been an important factor in supporting  business activity globally and in EDB countries.

This is stated in the March "Macroeconomic Review", prepared by analysts of the  Eurasian Development Bank (EDB).

However, the review notes that a month of growing global business  activity after a half-year contraction does not yet indicate that the  world's economy has stabilised and the trend has reversed, which  means that the risk of recession remains substantial.

High inflation continues to be the most significant obstacle to the  sustained strengthening of global business activity. The review  indicates the probability of more policy rate hikes in the US and the  eurozone.  EDB analysts believe that weak growth and recession risks  will force major central banks to discontinue their monetary  tightening cycles as early as the first half of 2023. Yet, even if  these cycles were to end, interest rates would remain elevated. This  will significantly slow down GDP growth in developed countries, which  means that EDB economies might face lower demand for their exports.

Global developments have different impacts on EDB economies.   Armenia, Kazakhstan, the Kyrgyz Republic and Tajikistan demonstrated  high growth rates in early 2023. Russia's seasonally adjusted GDP,  according to the EDB's calculations, grew slightly in January  compared to the previous month. Belarus can expect a slowdown in its  economic decline as early as February and growth in the second  quarter.

In most countries of the region, consumer price growth slowed early  this year, due in part to the easing of price pressures from global  supply chains and commodity markets.

That said, the review stresses that inflation risks are still on the  agenda of the region's monetary authorities. For this reason, some of  the central/national banks have maintained their interest rate  levels. EDB countries may further ease their monetary policies when  their national banks decide that inflation has stably slowed down. 

The Eurasian Development Bank (EDB) is an international financial  institution investing in Eurasia. For more than 17 years, the Bank  has worked to strengthen and expand economic ties and foster  comprehensive development in its member countries. The EDB's charter  capital totals US $7 billion. Its portfolio consists principally of  projects with an integration effect in transport infrastructure,  digital systems, green energy, agriculture, manufacturing, and  mechanical engineering.