EFSD Releases Regional Economic Outlook Autumn 2026

October 6, 2026

The Eurasian Fund for Stabilization and Development (the EFSD) has revised its economic growth projections for the region for 2026–2029 and assessed the external, regional, and country-specific risks and challenges ahead.

According to the Regional Economic Outlook Autumn 2026, regional GDP is projected to grow by 1.2 percent in 2026, down from 1.8 percent in 2025. Excluding Russia, growth is projected at 4.8 percent. The EFSD has raised its 2026 growth forecasts for most countries in the region, the exceptions being Russia and Kazakhstan.

"One of the main surprises of 2026 has been how far the region's economies have diverged. Russia has slowed sharply, while most other countries continue to grow strongly, supported by domestic demand," said Sergei Ulatov, EFSD Chief Economist.

External environment

Global growth is slowing amid the conflict in the Middle East, higher energy and transportation costs, and tighter global financial conditions. The EFSD expects global GDP growth in 2026 to remain at or below 3 percent. For the region, developments in commodity markets are a more significant external factor than the global slowdown itself, as raw materials, metals, energy and food account for a large share of foreign trade.

Country-by-country outlook

Russia. GDP growth is projected to slow to 0.6 percent in 2026. Activity recovered in the second quarter, but the economy remains weighed down by high financing costs, supply-side constraints, and a temporary decline in oil refining output. As these factors fade, growth should gradually return to its potential rate, reaching 1.3 percent in 2027 and about 1.7–1.8 percent in 2028–2029. Year-end inflation in 2026 is projected at 6.2 percent, with a return to the 4 percent target expected in 2028.

Kazakhstan. Growth is expected to remain strong at close to 5.0 percent in 2026. Lower oil production, following the accident at Tengiz and repairs to Caspian Pipeline Consortium infrastructure, is constraining the commodity sector, while non-commodity industries and investment continue to support the economy. Growth is projected at 5.0 percent again in 2027 before easing to 4.1–4.2 percent. Year-end inflation in 2026 is projected at 9.5 percent, and is expected to remain above target throughout the forecast horizon.

Armenia. The economy is gradually moving towards a more balanced trajectory after several years of rapid expansion. GDP is projected to grow by 5.8 percent in 2026, stabilizing in the medium term near its potential rate of 5 percent. Year-end inflation is expected at 4.1 percent, easing to about 3 percent thereafter. The forecast also assumes gradual fiscal consolidation, with the budget deficit narrowing from 3.5 percent of GDP in 2026 to 2.2 percent of GDP by 2029.

Belarus. A rebound in investment and strong consumption, supported in part by favorable economic conditions, will lift GDP growth to about 2.0 percent in 2026. Growth is then expected to ease to 1–2 percent as the boost from domestic demand fades. Year-end inflation in 2026 is projected at 5.2 percent, but could accelerate to 6.4 percent in 2027 amid labor market tightness and sustained strong consumption.

Kyrgyz Republic. The Kyrgyz Republic will post the fastest growth in the region, at 9.7 percent in 2026, gradually slowing to 6.3 percent by 2029 as consumer demand cools. Strong activity is accompanied by elevated inflationary pressure: year-end inflation in 2026 is projected at 11.6 percent, with a return to the target range expected in 2028–2029. Substantial capital expenditure and large infrastructure projects are supporting growth, but they are also widening the budget deficit and raising financing needs.

Tajikistan. GDP growth is projected at 7.8 percent in 2026, slowing gradually to 6 percent by 2028–2029 as remittance inflows normalize. Year-end inflation in 2026 is projected at 5.2 percent, stabilizing near 5 percent thereafter. The budget deficit is expected to remain relatively moderate at 1.2–1.7 percent of GDP over the forecast horizon.

Risks

Overall, risks to the fall forecast have increased relative to the summer edition. In most countries, weaker global demand is for now being offset by strong domestic demand, but the scale and financing sources of that demand have become a key source of uncertainty. Higher government spending, rapid credit expansion, and large investment programs could lift growth above the baseline, but they could also slow disinflation, accelerate import growth, and deepen fiscal and external imbalances. 

"The main policy challenge now is to balance support for growth with price, fiscal, and external stability," Mr. Ulatov emphasized.

The EFSD Regional Economic Outlook Autumn 2026 presents forecasts of key macroeconomic indicators for Russia, Kazakhstan, Armenia, Belarus, the Kyrgyz Republic, and Tajikistan for 2026–2029, together with an analysis of the external environment and the main risks facing the region's economies.