EFSD Regional Economic Outlook. Winter 2025
The economies of the member states of the Eurasian Fund for Stabilization and Development (EFSD) maintained steady growth throughout 2022–2025; however, a slowdown is expected in the medium term against a backdrop of high inflation and intensifying external risks. Key tasks for most states in the region will include curbing inflationary pressures and ensuring long-term fiscal sustainability.
Key Trends (2024–2025):
- Growth: Supported by strong domestic demand, high investment activity, and stimulatory fiscal policies.
- Inflation: Remains high in most countries (Russia, Kazakhstan, Kyrgyzstan, Belarus) due to overheating demand, fiscal stimulus, and rising regulated tariffs. Only Armenia and Tajikistan have inflation levels within target ranges.
- Monetary Policy: The central banks of Russia, Kazakhstan, and Kyrgyzstan maintain tight monetary policies. Armenia and Tajikistan have room for easing.
- Foreign Trade: Negative dynamics are observed, including a contraction or slowdown in export growth, increased imports, and widening trade deficits.
Medium-Term Forecast (2026–2028):
- Growth Slowdown: GDP growth rates in all countries will decline compared to 2024–2025. Economic growth in Kazakhstan, Kyrgyzstan, and Tajikistan peaked in 2025.
- Gradual Decline in Inflation: The central banks of Russia, Kazakhstan, Kyrgyzstan, and Belarus face the difficult task of returning inflation to target levels.
- Fiscal Pressures: Fiscal consolidation is a priority for Russia, Kazakhstan, and Armenia. Kyrgyzstan and Tajikistan will face large-scale expenditures on infrastructure and state-owned enterprises.
- Downside Risks: External risks dominate, including a slowdown in the Russian economy, worsening commodity price conditions, and the influence of geopolitical factors.
Chief Economist’s Commentary:
"The economies of most EFSD member states demonstrate high resilience, showing confident growth rates," notes Sergey Ulatov, EFSD Chief Economist. "However, we are observing growing imbalances. In Kazakhstan and Kyrgyzstan, signs of overheating persist, necessitating tight monetary policy. At the same time, inflation in Armenia and Tajikistan is close to target levels, creating space for softer conditions. Our forecast has been revised slightly; however, the balance of risks remains negative, with external factors prevailing. Importantly, despite current challenges, we see no serious threats to macroeconomic and financial stability in the medium term."
Key findings by country are available in the summary version of the report.