By Andrei Skvarsky.
Investment bank Renaissance Capital predicts economic growth of between 2 and 6 per cent for 2021 for the majority of former Soviet republics and expects Russia to end the year with a gross domestic product increase of 3.8 percent.
The Russian percentage is higher than the consensus forecast, RenCap’s economist for Russia and the Commonwealth of Independent States, Sofya Donets, said during an online news briefing in presenting a RenCap forecast for 2021 for what the bank terms the CIS+ region – the CIS less Kyrgyzstan but plus Georgia and Ukraine.
The reasons for this optimism for the CIS+ include systematic Covid-19 vaccinations that are being launched with the anticipated consequent lifting of coronavirus-caused restrictions, effects of 2020 financial stimulus measures, and relatively low levels of sovereign debt, Donets said.
All CIS+ countries had “avoided excessive buildups” of sovereign debt during the Covid crisis, with the region’s highest debt level still being lower than the average for emerging and frontier markets worldwide, she said.
Key interest rates in Russia and Ukraine will show the highest rises in the CIS+ with the former going up to 5.5 per cent and the latter reaching 8 per cent, RenCap expects, both increases being higher than consensus forecasts.
RenCap’s base 2021 scenario also involves stable inflation in the majority of CIS+ countries, partly as a result of anticipated stable wage increases.
in the latter, both amounts being higher than the consensus forecasts.
However, Georgia is likely carry out the biggest rate reduction in the region, to 6 from today’s 8 per cent, according to the bank.
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