1. OECD Eurasia Competitiveness
Programme
1
Regional overview of the economic
impacts of the war against Ukraine on
Eastern Partner and Central Asia countries
2023 Annual Meeting of the GREEN Action Task Force
11 May 2023
Co-funded by the
European Union

2. 2
OECD Eurasia Competitiveness Programme
Assessing the impact of the war in Eurasia
Two OECD reports were launched in December 2022
The OECD Eurasia Competitiveness Programme assessed the economic impact of
Russia’s invasion of Ukraine on the Eastern Partner (EaP) region and Central Asia.
• Two reports explore, in particular, the impact of these disruptions on inflation, migration,
remittances, investment, and trade on, respectively, the Eastern Partner region and Central Asia.
• Both reports provide an overview of impacts and policy recommendations to mitigate the
shock and increase resilience going forward.
Both reports are
available online
EaP countries (link)
Central Asia (link)

3. 3
OECD Eurasia Competitiveness Programme
Energy and wheat
exposure to Russia is high
• RU fossil fuels exceed
50% of total energy
supply to AM, KG and
MD, 15% in GE and MG,
and 1/3 in TJ
• RU wheat exports
exceed 50% of domestic
utilisation in AM, GE
and TJ; and at or over
30% in AZ, KG and UZ
Remittances from Russia
are a significant source of
income
• Remittances from RU
exceed 20% of GDP in
KG and TJ
• Substantial remittance
flows go also to AM, GE,
MD and UZ
Russian investments in
the region remain
important
• More than 10% of FDI
flows to most countries
in the region are from
RU
• RU FDI remain
important for large-
scale mining projects
The region’s economies are closely linked to Russia’s
Unexpected short-term effects, but exposure to long-term shocks persist
Russia is among the top
trade partners for
Eurasian economies
• RU is a large export
and transit destination
• RU is among the
region’s major sources
of imports and an
important export
market for Central Asia
Labour
migration
and
remittances
Investment
Energy and
food
dependence
Trade and
supply chains

4. 4
OECD Eurasia Competitiveness Programme
Three major economic shocks in two decades,
with GDP growth recovering below pre-crisis
levels
Growth across the region remains vulnerable to shocks
In 2022 growth has been driven by
factors likely to prove transitory
EaP and Central Asian countries have
been buffeted by successive shocks
Influx of skilled workers and firms from Russia
and Belarus, commodity price rises, and fiscal
measures supported growth, while the longer-
term outlook remains uncertain
-35
Source: IMF WEO.

5. 5
OECD Eurasia Competitiveness Programme
Impact of the war reverberates across Eurasia
• GDP contracted by 30% in 2022
• Estimated 30,000+ dead, tens of thousands wounded, over 7.2m refugees across Europe, around
6.3m internally displaced (November)
• Estimated US$127 billion damage to infrastructure by September, loss of trade and investment,
economic activity forgone
Some signs of resilience: Ukraine has so far managed to ensure food security, and agriculture
exports resumed as logistical bottlenecks are addressed.
Impacts have been more mixed on the rest of the region
The war has left Ukraine devastated
Moldova finds itself at the confluence of shocks
• Moldova is the only EaP country besides Ukraine itself with no expected growth in 2022, with
unique challenges related to compromised access to Black Sea ports, the influx of more than
96,000 Ukrainian refugees and nearly 700,000 border crossings.
For the rest of the region, milder impact than expected so far, but several risks remain:
• Inflation has reached record highs not seen since the 1990s.
• High commodity prices have been a major compensating factor for commodity exporters.
• Influx of Russian citizens and money adds to growth, but also to inflationary pressures.
• Trade so far has been resilient, but stagnating Russia, slower growth in China and uncertain
prospects for the EU threaten growth in the medium term.

6. 6
OECD Eurasia Competitiveness Programme
Eurasia’s economic outlook remains highly uncertain
Surging inflation creates food and energy security risks
Despite a strong monetary policy reaction,
inflation has strongly increased, driven by food
and energy prices.
And puts pressure on vulnerable
households
Inflation has reached record levels
across Eurasia economies
The surge in food and energy prices adds
additional pressure on pre-existing inflation,
while the share of food and energy in
household expenditure is high in the region.
Source: National Statistical Offices and Central Banks.
0%
5%
10%
15%
20%
25%
30%
35%
Kazakhstan Kyrgyzstan Mongolia Tajikistan Uzbekistan Armenia Azerbaijan Georgia Moldova Ukraine
Annual inflation
January 2022 October 2022 March 2023

7. 7
OECD Eurasia Competitiveness Programme
Eurasia’s economic outlook remains highly uncertain
Longer-term prospects for exports are not encouraging
The de facto closure of Russia as a trade
route is especially acute for landlocked Central
Asia, without credible short-term alternative
routes: zero-COVID policy in China, Afghanistan
and Iran to the South, current low capacity of
the “Middle-Corridor”
The economies of Eurasia’s major
trading partners are slowing down
Central Asian economies are
constrained on their trade routes
OECD growth prospects for 2023 have been
revised downwards for the EU (-2pp) and RU
(-6.9pp), growth is projected to stagnate in CN
(-0.5pp) as the zero- COVID-19 policies continue
to weigh on demand, lowering export
prospects for Eurasia
Corridor Time Synthesis
Northern Transit: CH-N Europe
o 14-20 Days
Trans-
Caspian
Transit: CH – Turkey/S Europe
• 15-20 Days (Optimal)
• 20-30 Days (Normal)
Regional: KAZ - Turkey/S Europe
• 25-60 Days Multimodal
Southern
Central Asia
Transit: CH-S Europe
o 14-20 Days
Sea o 35-45 Days to Istanbul
o 40-50 Days to Hamburg Source: EBRD.

8. 8
OECD Eurasia Competitiveness Programme
Eurasia’s economic outlook remains highly uncertain
Rising cost of debt puts pressure on governments and businesses
A fragile post-COVID recovery did not allow
Eurasian governments to regain fiscal space:
debt levels rose, and public finances might
come under strain if additional support to their
economies was to be required.
And constrain access to finance for
firms, especially SMEs
Tightening financial conditions might
negatively affect public finances
COVID-19 support packages relieved firms from
liquidity and financing shortages, but high
dollarisation remains a feature of private
sector debt in EaP countries. In Central Asia
SMEs might lose access to finance as the cost
of debt increases.
-15%
0%
15%
30%
45%
60%
75%
90%
Debt as % GDP in 2022*
Increase between 2019 and 2020 (pp)
Increase since 2019 (pp)
*except for Ukraine (2021)
Source: IMF WEO.
-
2
4
6
8
10
12
14
16
0%
20%
40%
60%
80%
100%
All Large SME All All Large SME
AM GE MD AZ UA
Loans in local currency Loans in foreign currency
Interest rate LC Interest rate FC
(rhs) (rhs)

9. 9
OECD Eurasia Competitiveness Programme
Advancing their reform agenda in uncertain
times will require Eurasia governments to
address long-term structural needs and
redefine their economic relations with Russia
 Further reforming their business
environments.
 Mobilising investments for the green
transition.
 Diversifying trade away from Russia and
China by opening up new trade routes and
advancing regional integration
(infrastructures and harmonisation of legal
and regulatory standards).
Eurasia needs to address long-term
structural needs
Supportive fiscal policies can offset part of the
negative economic effects, but should be
handled with caution to avoid increasing
indebtedness and inflationary pressures:
 Provide targeted and temporary support to
most vulnerable households to ease the
impact of price increases and to protect
and integrate refugees.
 Provide targeted and temporary support to
businesses to help them weather supply
chain disruptions and liquidity
shortages.
 Refrain from protectionist policies to
ensure trade keeps flowing.
Short- and medium-term responses
require substantial public expenditures
The long-term impacts of the war might exacerbate Eurasia’s
economic vulnerabilities and require close policy attention

10. OECD Eurasia Competitiveness Programme
10
Contact details
Amélie Schurich-Rey
Economist and Policy Analyst
e-mail: amelie.schurich@oecd.org
Grégory Lecomte
Head of the Central Asia Unit
e-mail: gregory.lecomte@oecd.org
Thank you.
For more information
https://twitter.com/OECDEurasia https://oecd.org/newsletters
Francesco Alfonso
Deputy Head of Unit and Economist
e-mail: francesco.alfonso@oecd.org
Daniel Quadbeck
Head of the Eastern Partner Unit
e-mail: daniel.quadbeck@oecd.org