EDB Macro Review: Economic activity in Armenia increased by 10.4% y/y in Q1 2024, driven by growth in the industrial sector

ArmInfo. Most member  countries continue to display robust growth: the aggregate GDP of the  EDB's region of operations increased by 4.6% YoY in January -June  2024, after an increase of 3.9% in 2023.This is evidenced by the data  of the Macroeconomic Review for 6 member states of the Bank, prepared  by EDB analysts.

In January-June, the economic activity indicator in Armenia increased  by 10.4% y/y due to the dynamic growth of output in the industrial  sector, primarily the processing of precious metals," the review  notes.

It is further noted that the Belarus's economy grew by 5% YoY during  the same period, driven, among other things, by growth in industrial  production and agriculture, while maintaining positive growth  dynamics in most other sectors.

" Kazakhstan's economy is recovering from the consequences of spring  floods, as evidenced by leading indicators. The GDP grew by 3% YoY in  the first half of 2024, fueled by an increase in industrial  production and the service sector. 

The Kyrgyz Republic experienced a GDP growth rate surge to 8.7% YoY  in January-July 2024, largely due to intensified investment activity.   In Russia, industrial production remains the primary driver of  economic growth. In the first half of 2024, the nation's GDP grew by  4.7% YoY; however, the signs of potential economic slowdown gradually  become apparent.

In the first half of 2024, Tajikistan maintained a high GDP growth  rate of 8.2% YoY, supported by strong domestic demand driven by both  consumption and investment," the Bank's analysts emphasize.

At the same time, it is noted that investment activity continues to  grow in most countries in the region.

"In Armenia, it is supported by a steady increase in public  investment and housing construction. In Belarus and Russia, import  substitution programmes are growing, driven, among other things, by  public investment.  Kazakhstan is building up its strategy for the  development of mechanical engineering, planning to expand the  programme to other sectors. Investment growth in Kyrgyzstan is  largely driven by investment in energy, transport and extractive  industries, while Tajikistan keeps actively investing in energy  facility construction.

Inflation remains heterogeneous across the region: in Armenia,  Kyrgyzstan and Tajikistan, inflation dropped below target levels. In  Belarus, the growth in the cost of the basket of goods remains within  the target corridor. That said, inflation in Russia and Kazakhstan  continues to stay above target levels," the review continues. 

The Macroeconomic Review states that the economic activity in the  world's largest economies will not have a stimulating effect on the  economy of the Bank's region of operations. GDP growth is expected to  slow down in the United States, the European economy is recovering at  a slow pace, and business activity in China still remains at a high  level notwithstanding a certain decline in the second quarter of  2024. Amid growing concerns about economic activity in developed  countries, central banks have started cutting interest rates or plan  to do so in the near future. EDB's analysts do not rule out the risks  of a slowdown in business activity in key global economies, and  assess the potential consequences for the economies of the region  through a risk scenario.

The Eurasian Development Bank (EDB) is a multilateral development  bank that carries out investment activities in the Eurasian region.   For over 18 years, the EDB has been promoting the strengthening and  expansion of economic ties and the comprehensive development of its  member countries. The EDB's authorized capital is USD 7 billion. The  EDB's portfolio is primarily comprised of projects with an  integration effect in the areas of transport infrastructure, digital  systems, green energy, agriculture, industry and mechanical  engineering. In its activities, the Bank is guided by the UN  Sustainable Development Goals and ESG principles.