Economic growth in South Caucasus decreasing

The International Monetary Fund predicts that in 2009 economic growth in the South Caucasus and Central Asia will decrease from 6% to 2%.

The IMF thinks that the recent impressive economic development of the countries of this region was mainly determined by the export of oil materials and money transfers from abroad. Exporters of energy have managed to create considerable reserves and state investment funds.

However these countries mostly depend on the demand of the outside world for their economic success. The IMF report believes that this has been destroyed due to the financial crisis. It also concludes that the economic situation in Central Asian and South Caucasus countries is worsening very dramatically.

Most seriously damaged are the countries economically dependent on Russia (this statement seems to confirm President Saakashvili’s statement that dependence on Russia has made the Armenian economy collapse). In most of the countries of this regions Russia remains a major trade partner and the main source of financial transfers. The decrease of economic growth in Russia negatively influences trade as well as money transfers.

The IMF report concentrates on the dynamic of economic growth. In 2007 it was 12%, in 2008 it halved. Local currencies being in essential dependence on the Russian rouble are experiencing the threat of devaluation.