VTB Group downgraded gross domestic product (GDP) growth expectations on Tuesday for multiple CIS countries, including Georgia, Azerbaijan, Kazakhstan, Belarus and Ukraine.
Dmitri Fedotkin, a VTB Capital analyst, said the downgrades were a result of complex global economic conditions and geopolitical turbulence in the CIS region. Slow economic growth in Russia also impacted the downgrade.
"The biggest revisions were to our forecasts for Ukraine, where we now think a pronounced GDP decline is inevitable, accompanied by a spike in inflation," Fedotkin said. "At the same time, hefty devaluation has created grounds for a positive correction in the previously deep deficit on the current account."
VTB Group is also looking closely at Belarus, where current account deficits and uncertainties over the availability and timing of external financing options endure.
Georgia, Azerbaijan and Kazakhstan likewise face GDP challenges in 2014.
"Georgia, this year will likely be more of a transition period before growth strengthens in 2015, helped by the start of construction on a new pipeline from Azerbaijan into Turkey," Fedotkin said. "The dynamics in Azerbaijan and Kazakhstan will continue to depend heavily on energy-related projects and wider investment activities."
The one coverage country left out of the downgrade was Armenia. The country could see GDP growth in 2014 due to a delay in pension reform, which is having a positive effect on disposable incomes and consumption. Armenia is also seeing more favorable trading terms after joining the Customs Union.
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