The Eurasian Economic Commission presented information to the Heads of Government of the Eurasian Economic Union countries on the macroeconomic situation in the Member States as well as proposals to ensure sustainable economic development. The Eurasian Intergovernmental Council’s meeting was held on February 24 in Nur-Sultan.
The full text of the EEC report was posted on the website.
As noted in the document, the macroeconomic situation of the last two years throughout the world and the EAEU develops under great impact of the COVID-19 pandemic, geopolitical tensions and trade protectionism. After the recession in 2020, the EAEU economy recovers: favorable external economic conditions contributed to the revival of consumer and investment demand in the Union States as well as employment rehabilitation.
According to the EEC, the GDP growth of the EAEU States amounted to 4.5% in 2021. This corresponds to the value set by the Main Guidelines for the Eurasian Economic Union Member States’ Macroeconomic Policy for 2021-2022.
Along with that, the economies of Belarus, Kazakhstan and Russia have already reached the pre-pandemic level. Mutual and foreign trade has increased to a significant degree. As of year-end 2021, the volume of mutual trade increased by 31.9% compared to the previous year and reached a new historical high of 72.6 bln US dollars. Foreign market shares are strengthened. In 2021, the EAEU exports to third countries increased by 44.1% and reached 525.6 bln US dollars – the highest value since 2015.
"Although the pandemic has affected the business activity and contributed to progressive structural changes due to rapid development of the new technological wave, there are some positive structural changes", the report says. “The EAEU accelerated import substitution processes due to the increase in domestic production and mutual trade, decreased the EU share and increased China's share in foreign trade; the share of national currencies in foreign trade settlements grows as well".
For example, the European Union’s share in the EAEU foreign trade pattern decreased from 46.2% in 2015 to 36.7% in 2020. On the contrary, the share of APEC and SCO countries in the EAEU foreign trade pattern increased during this period from 29.6% to 36.4% and from 16.3% to 24.1%, respectively.
New industry sources of economic growth appear. With the general decline in the EAEU economic activity in 2020, the growth of pharmaceutical industry amounted to 22% and the volume of communication and e-trade services increased.
The report gives some data that key manufacturing industries of the new technological wave received an additional boost: bioengineering technologies - due to mass vaccination of the population; information technologies - due to mass transition of workers and students to remote work as well as introduction of digital traceability systems for goods and vehicles; nano- and microelectronics - due to a sharp growth in demand for computer engineering means and devices. Healthcare was given a hefty development boost.
The share of information technology sector in GDP has grown in all the EAEU States, and Belarus takes the lead in this field. As of year-end 2020, the share of information technologies and communications in the country's GDP reached 7.1% (6.3% in 2019). Armenia ranks second (3.3% in 2019 and 3.8% in 2020). In other States, this indicator ranges from 2% to 3%.
"Intensifying the production and scientific and technological potential available in the EAEU enables counting on achieving the objective for the EAEU GDP growth at the level of 4.5%- 5.5% per year set in the Main Guidelines for Macroeconomic Policy for 2021-2022 as well as the Member States’ convergence in terms of economic development", the report’s authors emphasize.
Today, the Union countries have huge potential for development associated with the use of standby production capacities, their high-quality technological update and increased labor productivity. As of year-end 2020, capacity utilization was at the level of 50% in Kyrgyzstan, 52% in Kazakhstan, 62% in Russia and 70% in Belarus. According to the EEC, an increase in the average capacity utilization in the manufacturing industry by 10% can result in enhancing growth of the Member States’ manufacturing output by 6-15%, depending on the structure of national economies.
As evidenced by the international practice analysis, this is possible in case of a boosted increase in investments at the expense of internal sources. Expanding sources to finance investments in integration projects should be promoted by more active involvement of regional and national development institutions in this process.
The entry of economies into the path of sustainable development should also contribute to converging the level of the EAEU economic development. Nowadays, significant gap - more than 5.5 times - in per capita income levels between high- and low-income countries still remains.