BOUNCING OFF THE BOTTOM: ECONOMIC RECOVERIES IN THE CIS.

The CIS statistical office in Moscow has recently released revised data on economic growth trends in CIS countries during the past ten years (CIS Statistical Bulletin, #7, April 2001.). Last year was the first in which all CIS countries reported positive economic growth, though for Georgia and Moldova growth was quite anemic at 1.9 percent. Since virtually all CIS countries continue to report favorable economic statistics in 2001, it is useful to compare the extent of economic recoveries across the region.

Most hit their economic low point in the first half of the 1990s. Azerbaijan, Belarus, Kazakhstan, Kyrgyzstan and Uzbekistan saw bottom in 1995. Armenia, which was the first to come out of the blocks, did so in 1993. Georgia did so the year after. A number of countries had very extended recessions: Russia hit bottom in 1998, Moldova and Ukraine in 1999.

The countries that have enjoyed the largest surge in output since hitting bottom have been Armenia (up 45 percent) and Azerbaijan (up 41 percent). The recoveries in both countries are due to very different reasons. Over the last four years, Azerbaijan has enjoyed very rapid growth because of foreign investment in its oil industry. Armenian growth has come the hard way. The country introduced market reforms and privatized early on. It has enjoyed some inflows of direct foreign investment from the Armenian Diaspora, and the extent of economic decline during the years of conflict in Nagorno-Karabakh resulted in a very deep recession. Subsequent growth has come from a very low base.

Belarus, Georgia and Kyrgyzstan since the mid-1990s have enjoyed almost as large an upswing in output as Armenia and Azerbaijan, with increases in GDP in excess of 30 percent. Like Armenia, Georgia and Kyrgyzstan have generated growth through the introduction of market forces and privatization, especially privatization of agricultural land. Most observers suspect that Belarus’ reported economic growth has resulted from the falsification of its official statistics. To the extent that reported increases in GDP are real, Belarus has benefited from easy concessionary trade financing from Russia, and from demand for its manufacturers from traditional Russian customers.

Tajikistan and Uzbekistan report output gains of some 20 percent since the mid-1990s. Tajikistan’s increases come from a very low base as the economy collapsed during the 1992-1997 civil war. In contrast, Kazakhstan and Russia only report cumulative increases in output of a little over 11 percent. Both suffered a second recession in 1998; 2000 was the only year of dramatic increases in output for these two countries. Not surprisingly, the laggards in terms of growth have been Moldova and Ukraine. These economies only began to grow in 2000 and thus have a long ways ahead before they narrow the growth gap between themselves and other CIS economies (CIS Statistical Bulletin, #7, April 2001).

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