Recovery in Eastern Europe and Caucasus affected by Russia-Ukraine crisis

By: Aynur Jafarova

EBRD experts believe growth in Eastern Europe and the Caucasus accelerated towards the end of 2013, but worsened considerably in early 2014 due to the tensions in Ukraine.

The EBRD noted this fact in its latest economic report published on May 14.

“A growth pick-up in the last quarter of 2013 was in part driven by a good harvest season. At the same time, this strong growth in agriculture was not sufficient to compensate for the general slowdown in many other sectors, as well as weak investment activities and low FDI inflows,” the report said.

Preliminary estimates show that GDP grew by 2.5 percent year-on-year in the first quarter of 2014 on the back of the drop in oil output, the EBRD noted.

“The non-oil sector continued to grow at a fast pace,” the bank said. “Credit growth remained buoyant at the beginning of 2014 and showed little signs of moderating.”

Assuming that the fall in oil production is short-lived and the non-oil sector will continue to expand, output is expected to grow at the rate of 3.5 percent in 2014, in line with January forecasts, the report stressed.

The EBRD has been active in Azerbaijan since the country’s independence. To date, the bank has invested in 146 projects with over $2.5 billion across various sectors of the Azerbaijani economy.


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