ARMENIA, GEORGIA, MOLDOVA: PROMISING ECONOMIC OUTLOOK AT BEGINNING OF 2000…

The year 2000 was to have been one of recovery for all of the CIS economies. Spillover effects from the Russian crisis, which had caused GDP declines or sharp slowdowns in GDP growth across the region in 1999, had begun to fade by the second half of 1999 as economic growth in Russia picked up. Surging demand in Russia for imports from other CIS countries was projected to fuel real GDP growth in each of the CIS economies in 2000. At the beginning of the year, rising exports from Moldova of wines and food products to Russia was forecast to drive 3.7 percent growth in Moldova, following an aggregate 13.3 percent drop in GDP in 1998 and 1999. After a deterioration in Armenian public finances triggered a sharp drop in aggregate demand and GDP in the fourth quarter of 1999, strong export growth was projected to lead to 4.5 percent growth in Armenia in 2000. Similarly, the Georgian economy, battered by knock-on effects from the Russian crisis and a deep fiscal crisis in 1998-1999, was forecast to grow by 5.4 percent after growing by 3.0 percent in 1999.

Indeed, exports to Russia have been booming this year in most CIS countries, Armenia, Georgia and Moldova included. In Armenia and Georgia, rapid export and industrial output growth fueled strengthening GDP figures, while industrial output was up moderately in Moldova. Moldovan statistical authorities have yet to publish first half GDP data. Unfortunately, while GDP growth is forecast to continue for most CIS economies in the second half of 2000, a severe drought throughout much of the Black Sea region is forecast to lead to sharp declines in GDP in Armenia, Georgia, and Moldova in 2000.

…TURNS TO DUST FOLLOWING A SEVERE DROUGHT.