Publication: Monitor Volume: 6 Issue: 57

End-year GDP data are now available for most CIS countries and show a remarkable divergence in performance across the region. Several countries registered solid growth in 1999. The most rapid was reported by Azerbaijan (7.4 percent), followed by Uzbekistan (4.4 percent), Tajikistan (3.7 percent), Kyrgyzstan (3.6 percent), Russia (3.2 percent), Belarus (3.0), Armenia (3.0 percent), Georgia (3.0 percent) and Kazakhstan (1.7 percent). Results from two other countries, Moldova and Ukraine, were less favorable. The final official figures for Turkmenistan are still unavailable (Social-Economic Statistics for Russia 1999, General Committee of the Russia Federation for Statistics).

Much of the growth stemmed from increases in industrial output. Russia, for example, which reported an 8.1 percent rise. This increase was driven by higher world market commodity prices, especially for oil and gas, and the aftereffects of the August 1998 devaluation. A number of producers in heavy industry, especially steel and chemicals, reported large increases in output as the devaluation priced them into world markets. Steel mills became so competitive that the U.S. government jawboned the Russians into imposing “voluntary” export restraints on steel to avoid dumping charges. In Kazakhstan, the Karaganda Steelworks also reported a sharp rebound in output while oil production rose sharply.

In the smaller CIS countries, the rebound in GDP reflected two trends: a modest rebound in import demand in Russia in the fourth quarter and diversion of exports to non-CIS markets. Armenia, for example, has enjoyed a remarkable surge in exports of cut diamonds as the Armenian Diaspora invested in cutting facilities in the country. Total exports to non-CIS countries, driven by cut diamond sales, surged 57.7 percent while exports to the CIS fell 16.9 percent last year. The Georgian economy benefited from exports to West European and U.S. markets of cognacs, wines and food products. A modicum of political stability in Tajikistan resulted in increased output at an important aluminum mill and the hydroelectric power plants.

Moldova suffered a 1.7 percent fall in its GDP–a poor performance which reflects a difficult period if adjusting its balance of payments; it has had to tighten its belt because lenders are no longer willing to provide additional loans. Ukraine also reported a decline in GDP, but of only 0.4 percent, the smallest decline since independence. It appears to be poised for growth in 2000.