Palms & Company Document

ECONOMIC PROSPECTS FOR CIS COUNTRIES UNCERTAIN

-UNCTAD

by

GENEVA SEPTEMBER 11 (ITAR-TASS) - COMMONWEALTH OF INDEPENDENT STATES (CIS) COUNTRIES INCREASINGLY LAG BEHIND THEIR EASTERN EUROPEAN NEIGHBOURS IN OVERCOMING THE DOWNTURN CONNECTED WITH ECONOMIC REFORMS, SAID AN ANNUAL REPORT ISSUED HERE ON MONDAY BY THE U.N. CONFERENCE ON TRADE AND DEVELOPMENT (UNCTAD). EXPERTS BELIEVE THAT THE GAP BETWEEN THESE TWO GROUPS OF STATES-THE GAP WHICH FIRST MANIFESTED ITSELF IN 1993 AND WIDENED IN 1994 -- MAY INCREASE STILL FURTHER.

ON THE WHOLE, PRODUCTION IN THE REGION, WHICH COVERS EASTERN EUROPE AND THE FORMER SOVIET UNION, DECREASED BY 10.1 PERCENT IN 1994. A UNCTAD FORECAST FOR THIS YEAR IS THAT PRODUCTION WILL DECLINE BY ANOTHER 4.2 PERCENT. HOWEVER, THE STATE OF AFFAIRS IN VARIOUS PARTS OF THE REGION IS NOT THE SAME. THE TWO WINGS OF THE REGION - EASTERN AND WESTERN - MAKE HEADWAY TOWARDS ECONOMIC RECOVERY AT DIFFERENT RATES. THE ECONOMIC RECOVERY RATE IN THE CIS IS INCOMPARABLY SLOWER THAN, SAY, IN POLAND, THE CZECH REPUBLIC, SLOVAKIA, AND SLOVENIA, WHERE LAST YEAR SAW AN UPTURN WHICH AMOUNTED TO 3.7 PERCENT FOR THE ENTIRE WESTERN WING OF THE REGION ON AVERAGE.

AS FAR AS CIS COUNTRIES ARE CONCERNED, THEIR IMMEDIATE PROSPECTS SEEM GLOOMY AND UNCERTAIN TO ECONOMISTS. ACCORDING TO UNCTAD, PRODUCTION IN RUSSIA DIMINISHED BY APPROXIMATELY 15 PERCENT IN 1994. ECONOMIC TROUBLES IN AZERBAIJAN, ARMENIA, GEORGIA, MOLDAVIA, AND TAJIKISTAN MANIFESTED THEMSELVES MUCH MORE FORCEFULLY, SINCE CONFLICTS AND POLITICAL INSTABILITY SERIOUSLY UNDERMINED THE PRODUCTION SYSTEM. IN MANY A REPUBLIC, A PRODUCTION SLUMP WAS ACCOMPANIED WITH AN ACCELERATED INFLATION, WHICH EXPERTS BLAME ON INEFFECTUAL MONETARY AND FISCAL POLICIES.

THE STRIDES MADE BY RUSSIA AND UKRAINE AT THE END OF 1993 IN THE REALISATION OF TOUGH FINANCIAL MEASURES WERE SHORT-LIVED. CIS COUNTRIES WILL HAVE TO MAKE RESOLUTE EFFORTS WITHIN THE FRAMEWORK OF THE DEMOCRATIC PROCESS TO EFFECT A CONSISTENT STABILISATION STRATEGY.

UNCTAD PREDICTS A CONTINUED ECONOMIC GROWTH FOR THE WORLD ECONOMY AS A WHOLE, ALTHOUGH ECONOMIC GROWTH RATE WILL DIMINISH IN 1995 FROM 3.1 TO 2.9 PERCENT. ASIA REMAINS THE WORLD'S MOST DYNAMICALLY DEVELOPING REGION WHERE A 6-PERCENT INCREASE IN PRODUCTION IS FORECASTED. CHINA STILL HAS A IMMENSE POTENTIAL, ALTHOUGH ITS ECONOMIC GROWTH RATE IS EXPECTED TO SLOW DOWN FROM LAST YEAR'S 11.8 PERCENT TO 9.6 PERCENT.

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