CAREC region has favorable growth, but policy challenges remain
CAREC countries, excluding the People’s Republic of China (PRC), will continue to post a solid recovery in 2013, based on the “Outlook for the Global Economy and CAREC Countries” presentation of the International Monetary Fund (IMF) at the 11th Ministerial Conference on Central Asia Regional Economic Cooperation (CAREC) on 30 October 2012.
The strong growth is due to the robust remittances from the Russian Federation to some CAREC countries, and oil-exporting CAREC countries also benefiting from rising world oil prices. Inflation is projected to remain relatively stable.
The IMF, however, cautioned the CAREC countries on the following challenges:
- Fiscal consolidation is needed in many CAREC countries through rebuilding of fiscal buffers to accommodate future adverse shocks.
- Further efforts are needed to strengthen bank balance sheets by pushing banks to build buffers and improve business models.
- Need to improve the business environment and level the business playing field by enhancing private sector–led growth.
- Need to remove hurdles to trade by promoting cross-border cooperation and developing the private sector.
The macroeconomic outlook as a region is broadly positive, although risks emanate from uncertainty in Europe, weakening demand from the PRC, and a potential shock from the United States fiscal cliff.
View the full IMF presentation.