The current economic situation in Turkey will make influence on the Region, especially on the countries, with which Turkey has direct trade relations. In this respect International Monetary Fund (IMF) outlines Georgia and Azerbaijan, the last IMF review reads regarding the Central Asia and Caucasus countries.
IMF presumes that Turkish LIRA depreciation will make negative affect on Georgia and Kyrgyzstan, because these countries depend on Turkish imports.
It is also noteworthy that even small negative changes in the global economy may make negative affect on economies of regional countries and exchange rates, especially in Georgia, Azerbaijan and Tajikistan – the countries with major foreign debts and high dollarization in the banking sector.
IMF suggests that business environment is an important factor for economic growth. IMF approves the new banking regulations. IMF notes that the region’s countries are demonstrating progress in this respect and make focus on Georgia and Armenia, where banking regulations and supervision over them grows.
The current problems in the region have deep roots. IMF indicates that high dollarization coefficient remains in the sector and this factor may result in balance losses amid the exchange rate volatility. Therefore, IMF points to the need of making fundamental reforms.
Growing state debts in Central Asia and Caucasus countries grow risks and debts taken in foreign currency or debts related to current exchange rate make countries more vulnerable to external risks, IMF report reads.