«Risks of economic downfall remain high, given the increase in the number of new cases of the virus abroad and uncertainty about the timing of vaccination,» Aigul Berdigulova, a Senior Analyst at the Eurasian Development Bank (EDB), told 24.kg news agency.
According to her, worsening dynamics in the industry and construction sector led to acceleration of the GDP drop in November. Consumer and investment demand continued to decline at double-digit rates. Economic activity also weakened in December 2020 due to a decline in gold production.
«Depth of the decline in consumer demand will begin to decrease at the beginning of 2021 due to the lifting of restrictions on operation of a number of enterprises in the service sector at the end of 2020 and a decrease in the number of active cases of COVID-19 in December — early January. However, the risks remain high. We expect beginning of a sustainable economic recovery by the end of 2021,» Aigul Berdigulova said.
Experts stress that the scale of the decline in consumer activity decreased after stabilization of the internal social and political situation. The tense epidemiological situation, a decrease in the population’s income and the volume of consumer lending acted as restraining factors. At the same time, the drop in economic activity prevents the rate from being raised amid accelerating inflation.
«The ongoing recession in all sectors of the economy and the tense epidemiological situation are slowing down the process of business recovery. On the other hand, acceleration of inflation, mainly due to the rise in world and regional food prices, does not allow easing monetary conditions. According to our estimates, the effect of pro-inflationary factors will be exhausted in the first half of 2021 that will contribute to the return of the CPI dynamics to the target level,» the EDB analyst summed up.