How did coronavirus harm regional economy?

How did coronavirus harm regional economy?
How did coronavirus harm regional economy?

In August, the region's epidemiological situation deteriorated, which worsened economic expectations in the Caucasus countries.

Regional governments pursue expansionary fiscal and monetary policies.

According to experts, against the backdrop of the pandemic's crisis, the oil-exporting countries' economies have received a double blow. The fact is that the drop in oil prices since the beginning of March and the decrease in demand for it have affected local consumption.

It damaged not only oil-producing countries but their trading partners.

The fall in oil prices turned out to be an additional negative factor for neighboring countries' economies in the region. For many years, Azerbaijan and Russia have been the largest importers of oil products to Georgia. Armenia's leading partner is Russia, and there are close economic relations between Turkey and Azerbaijan.

In the first half of this year, Georgia's economy contracted by 5.7%, Armenia - by 6.5%, and Turkey - by 3.1%.

The actual "stop" of tourism harmed the economies of the region's countries. In the Georgian economy, this sector occupies 26.4%, and in the Turkish economy - 11.2%.

The region's best economic situation is in Azerbaijan, where the decline over the same period was only 2.7%.

In the first half of the year, Azerbaijan's foreign trade turnover decreased by 19.0%, which experts associate with a decrease in oil exports since 80.0% of the country's exports are oil.

Russia's foreign trade turnover decreased by 17.0%.

Georgia's foreign trade turnover decreased by 17.8% compared to the first half of 2019.

The decrease in trade turnover is mainly due to the decline in imports by 18.5%.

Experts say the decline in imports is the reduction in imports of cars and oil products. According to statisticians, vehicles imports also affected exports, since most of it is re-exported to Azerbaijan and Armenia.

In the second quarter of this year, the re-export of passenger cars to Armenia and Azerbaijan decreased by 69.6% compared to the same period last year.

In January-June 2020, imports of Armenia decreased by 12.9%, and exports - by 6.5%, led to a decrease in the country's foreign trade turnover by 10.7% compared to the same period last year.

Despite the global decline in prices, Turkey and Georgia's inflation is high: in the first half of 2020, average annual inflation in Turkey reached 11.9%, and in Georgia - 6.4%.

For the same period, average annual inflation in Armenia was 0.6%, in Russia - 2.8%, and in Azerbaijan - 2.9%.

Under the economic forecast of international organizations made in July, Georgia's economy will contract by 4.8%, and Russia - by 6.0%.

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