OFFICIAL DATA SHOW CIS ECONOMIES REBOUNDING…

Preliminary data released by the CIS Statistical Office (www.unece.org/stats/cisstat/macro0.htm) in mid-November show that most of the CIS economies recorded GDP growth in the third quarter. Four countries recorded growth rates above 7 percent, and one–Kyrgyzstan–posted double-digit output growth. Industrial production also grew strongly in most of these countries, with three of them (Armenia, Moldova and Russia) reporting double-digit increases. While the significance of these figures should not be overstated, they do provide the strongest evidence yet that the region’s economies are recovering from the “Russian flu” which broke out in the aftermath of the August 1998 Russian financial crisis.

The most rapid third-quarter GDP growth was reported by Kyrgyzstan (10.3 percent), Azerbaijan (9.5 percent), Armenia (8.5 percent), Kazakhstan (7.5 percent) and Uzbekistan (5.6 percent). For Armenia, Azerbaijan and Uzbekistan, these increases represent an acceleration of the growth which had already taken hold. Azerbaijan already reported 5.6 percent GDP growth at mid-year, while first-half output was up 4.9 percent in Armenia and 3.8 percent in Uzbekistan. For Kyrgyzstan and Kazakhstan, by contrast, this third-quarter growth represents a recovery from recessions: Kazakhstan reported a 3.3 fall in GDP at mid-year, while Kyrgyzstan’s GDP at mid-year was flat. Even with its 7.5 percent third-quarter output growth, Kazakhstan’s GDP for the first three quarters was only up 0.3 percent compared to the same period of 1998.

Most of the other countries have not yet shaken off the effects of the Russian flu. These include Tajikistan (which reported a 2.0 percent GDP decline during the third quarter), Ukraine (where GDP was reported up 0.9 percent), and Belarus (GDP up 2.0 percent). Although Georgia reported 3.7 percent output growth in the third quarter, the Georgian economy probably belongs in this group as well. Unlike the previous group, which generally reported broad-based growth across the economy, Georgia experienced a 46 percent decline in investment spending during the first nine months of 1999.

A final group consists of Russia, Moldova and Turkmenistan–countries for which third-quarter GDP data have not yet been released. Turkmenistan is the least willing to part with its official economic data. Somewhat surprisingly, industrial output data show strong growth in the third quarter for Russia (14.7 percent) and Moldova (12.0 percent). But while the third-quarter GDP data, when they are released, are likely to show relatively strong GDP growth for Russia, this is unlikely to be the case for Moldova, which is in the throes of a deep economic crisis.

…BUT WHAT DO THE NUMBERS MEAN?