Publication: Monitor Volume: 7 Issue: 100

The strong economic growth reported in the CIS last year was apparent in the region’s excellent export performance–which was also a dramatic change from most of the 1990s. Dollar export growth ranged from a low of 2 percent for Moldova (due to drought conditions) to 88 percent for Azerbaijan. Azerbaijan and Kazakhstan, which reported 63-percent dollar export growth, were beneficiaries of high prices for international oil prices. The increasing integration of the CIS economies into world markets boosted these countries’ export incomes substantially. The opening of the Baku-Supsa pipeline increased exports for Kazakhstan and Azerbaijan, as well as boosting transit revenues for Azerbaijan and Georgia.

The improvement in CIS export performance was not due solely to more favorable terms of trade for oil exporters, however. Countries that have no energy resources, such as Armenia and Georgia, also enjoyed dynamic export growth. Georgia boosted dollar exports by 38 percent and Armenia by 28 percent. The rise in Georgian exports was due to exports of metals, chemicals and foods. Armenia cashed in on its diaspora: Emigrant Armenian entrepreneurs have set up diamond finishing plants in Armenia. Cut diamonds–an industry that did not exist ten years ago–are now Armenia’s largest export.

Even in the energy-rich countries, export growth was not totally dependent on oil. Kazakhstan reported solid growth in exports of ferrous and nonferrous metals. Ukraine’s 26-percent export growth was driven by soaring demand from Russian manufacturers for imports of intermediate goods, especially alumina and bulk chemicals. However, Ukraine also exported substantial quantities of steel pipe as Russian energy companies dramatically increased investment in drilling and pipeline networks.

Export growth is likely to slow in 2001, as Russian import growth slows and the effects of last year’s sharp sun-up in oil prices dissipate. Still, a number of indicators suggest that many CIS economies have turned in the corner in terms of export performance. Improvements in the operation and performance of enterprises in Russia and elsewhere had a notable impact on export growth in 2000. The strong supply response to the fall in the exchange rate on the part of enterprises in CIS countries, especially the larger companies that produce such intermediate goods as chemicals, pulp, aluminum and iron and steel products, reflects improvements in the management of these companies that began in the second half of the 1990s. The new owners of these companies, regardless of how they obtained ownership, seem increasingly intent on making money. As such they are focusing on improving operations, aggressively selling their output and cutting costs. These measures have shown up in the increased export volumes, expanding industrial output, growing investment outlays and higher profits reported for 2000. These factors suggest that last year’s improved export performance should continue into 2001 (CIS Statistical Bulletins, February, March 2001).