The European Bank for Reconstruction and Development (EBRD) says Ukraine’s crisis is having a negative impact not only on the Ukrainian and Russian economies, but also across much of Eastern Europe and the Caucasus.
In Warsaw on May 14, at the bank’s annual board meeting, EBRD economists forecast that Ukraine will slump into deep recession this year and that sanctions against Russia over its role in the Ukraine crisis will contribute to economic stagnation there.
But the EBRD also is downgrading its growth forecasts for Belarus, Moldova, Armenia, Azerbaijan, and Georgia.
The bank says that’s because the geopolitical situation is making foreign investment in the region appear riskier and also is reducing the demand for exports.
In Belarus, the EBRD’s original 2014 growth forecast of a meager 0.5 percent has been revised further -- with zero growth now predicted.
Moldova had an 8.9 percent growth rate in 2013. But the EBRD now predicts growth will slow to 2 percent in 2014.
Armenia’s growth forecast for 2014 has been downgraded from 3.5 percent in 2013 to about 3 percent for 2014.
Azerbaijan saw growth of 5.8 percent in 2013. But oil production fell at the start of 2014. The EBRD says even if oil production manages to rebound, growth for 2014 will be about 3.5 percent.
In Georgia, despite an expected export boost from the signing of a EU Association Agreement in June, the growth forecast has been reduced to 4 percent for 2014 and 2015 due to lower regional export demand in connection with the Ukraine-Russia crisis.
The EBRD was founded to help ex-Soviet bloc countries make the transition to free-market economies and democracy.
The EBRD's 2014 board meeting in Warsaw concludes on May 15.