CIS ECONOMIES ENJOY FIRST YEAR OF STRONG GROWTH IN 2000…

The year 2000 saw the best economic performance in the CIS since the Soviet collapse. For the first time since independence, all twelve countries in the region reported GDP growth in 2000, many of them at very high rates. Growth ranged from a high, if unbelievable, 17.6 percent in Turkmenistan to 1.9 percent in Georgia and Moldova. Azerbaijan and Kazakhstan enjoyed oil-driven growth of 11.4 and 9.6 percent, respectively. But a host of smaller countries, many of them energy importers, reported solid growth rates in the 4- to 6-percent range as well. These countries included Armenia, Belarus, Kyrgyzstan and Uzbekistan, though the Belarusian and Uzbek figures are suspect. Even Ukraine, which had not experienced economic growth since independence, posted GDP growth of 6 percent in 2000.

The key to growth in the region in 2000 was Russia. Although until 2000 many of the former CIS economies were experiencing a dramatic shift in trade away from Russia, for most countries Russia is still their largest export market. In 2000, Russian dollar imports from CIS countries grew by over 25 percent, providing a very positive boost to CIS growth. In addition, lower inflation and a stable exchange rate in Russia helped to stabilize financial systems throughout the region, helping to further boost growth.

The increases in GDP in 2000 were accompanied by substantial increases in personal consumption in a number of countries in the region. Personal consumption was reported up 7 percent in Ukraine, the first notable increase since independence. In Russia, it rose by close to 10 percent. Throughout the region, retail sales rose. Dollar wages also began to recover from the sharp declines that followed the 1998 Russian crisis, permitting even lower income households to resume purchasing some imports from outside the CIS.

According to official data, the distribution of income also became more even in most countries. Governments in Kazakhstan, Moldova, Russia and Ukraine made major progress in reducing arrears on pensions and on wages to civil servants, including teachers and health care workers. As a consequence, income distribution became somewhat more egalitarian in Russia and elsewhere. At a minimum, the increasingly inegalitarian income structure that followed economic liberalization in the early 1990s seems to have stopped (CIS Statistical Bulletin, January 2001).

…AS CIS TRADE REBOUNDS AS WELL.