EDB ECONOMIES: POSITIVE TRENDS IN MUTUAL TRADE

Yaroslav Lissovolik (), Aleksei Kuznetsov () and Aigul Berdigulova ()
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Yaroslav Lissovolik: Eurasian Development Bank, Postal: Krasnopresnenskaya emb. 12, Moscow 123610 Russia
Aleksei Kuznetsov: Eurasian Development Bank, Postal: Krasnopresnenskaya emb. 12, Moscow 123610 Russia
Aigul Berdigulova: Eurasian Development Bank, Postal: 21, Erkindik Blvd, Bishkek, 720040, Kyrgyz Republic

No 2018-1, Working Papers from Eurasian Development Bank, Chief Economist Group

Abstract: World economic growth in 2017 was driven by an increase in business activity in both developed and key developing economies. In the context of falling deflation risk, as well as an improvement in unemployment – an important macroeconomic parameter – there has been a trend towards normalization of the US Federal Reserve System's monetary policy. The European Central Bank is also moving in the direction of reducing its quantitative easing program. Thus, monetary policy's supporting effect is gradually ending, but the system retains a lot of fiscal incentives to help accelerate economic growth. The rise in investment and the recovery of world trade in developed economies was the third component driving higher than expected growth in 2017. The world's positive economic growth trend drove a return to favorable conditions on world commodity markets. The average price for Brent crude in 2017 grew by 23.5% YoY. Prices for precious metals rose by 0.4% on average for the year, and non-precious metals grew by an average of 24.4%. Monetary policy in the main global economies will cease to be the main factor in supporting growth, but in Russia and other EDB countries, given current conditions, there is a chance to stimulate economic growth due to unprecedented low inflation and the possibility of a further lowering of the key rate. A softening of monetary policy in most of the region's countries will support investment activity. If a favorable external environment is maintained, positive trends can be expected to develop, including the restoration of foreign investment and growth of mutual trade between EDB countries. The increase in labor migrants' remittances will stimulate domestic demand in the region's economies, whose balance of payments largely depends on these transfers.

Keywords: Macroeconomy; Forecasting; Eurasia; EAEU Countries; Economic Growth; Monetary Policy (search for similar items in EconPapers)
JEL-codes: E17 E52 E66 O11 (search for similar items in EconPapers)
Pages: 73 pages
Date: 2018-02-15
New Economics Papers: this item is included in nep-cis, nep-mac and nep-tra
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