International Monetary Fund. Asia and Pacific Dept
Border closures and other pandemic containment measures have kept Vanuatu free from COVID-19. However, they have dealt a heavy blow to economic activity as tourism has come to a virtual halt. On top of the pandemic, Tropical Cyclone Harold and a volcanic eruption in Tanna Island caused extensive economic damage in 2020. In the context of a continued loss of correspondent banking relationships (CBRs) in the Pacific, Vanuatu also lost a key CBR at end-June 2021. Air Vanuatu, one of the state-owned enterprises (SOEs), is in the process of being restructured.
Austria entered the crisis from a strong position. Prudent policies prior to the pandemic provided significant policy space. Several lockdowns helped contain the virus but significantly impaired the economy. Real GDP contracted by 6.3 percent in 2020 and declined further in early 2021. The 2021 recovery is expected to be modest; the tourism and hospitality sectors will continue to be affected. Over the medium term, growth will accelerate in 2022 and then stabilize at potential, but the output level will remain somewhat below the pre-COVID trend. Uncertainty remains high.
The mission welcomes the progress made by the RK in improving the quality of GFS. The Ministry of Finance has taken into account several recommendations of the previous mission on increasing transparency, improving data quality, and regarding the channels used to provide GFS. In particular, updated bridge tables are used when generating statistics, National Fund (NF) data are recorded separately from national budget (NB) data, and GFS are disseminated through the IMF Integrated Data Collection System.
International Monetary Fund. Middle East and Central Asia Dept.
The Kyrgyz economy is highly dependent on remittances and foreign aid and does not have access to international capital markets. Inequality is relatively low, but poverty is widespread. The COVID crisis led to a sharp recession with output contracting by 8.6 percent in 2020, public debt rising by 16.5 percent of GDP to 68 percent, and the som depreciating by 19 percent against the US$. Under the assumption that the global pandemic begins to decisively recede this year, a rebound in growth is expected in 2021–22. However, significant uncertainty surrounds the baseline outlook and the recovery could be delayed if downside risks materialize. In the medium to long term, the main challenge is to create jobs for about 65,000 new jobseekers annually and to reduce labor out-migration. This will require deep structural reforms to transform the economy from a reliance on remittances to more diversified and private sector-led growth that is underpinned by higher investment and exports.
International Monetary Fund. Western Hemisphere Dept.
The pandemic interrupted a prolonged growth spell that made the Dominican Republic one of the most dynamic economies in the region amid strong growth, macroeconomic stability and improved social outcomes. This built resilience to the shock—including by maintaining access to markets—and allowed a decisive policy response to address the health emergency, support growth, and protect the vulnerable.
Macroeconomic performance and buffers were strong when the COVID-19 pandemic hit. Economic and social restrictions instituted in March 2020 helped slow new infections and mitigate negative health outcomes but triggered a deep decline in activity in Q2:2020. The slump was followed by a strong rebound in Q3 as the restrictions were eased. With the resurgence of the virus, pressures on the health system peaked in late-March 2021 and eased after a new round of restrictions. Going forward, the outlook is for a near-term economic recovery subject to large two-way risks. The strength and durability of the recovery hinges on the evolution of the health situation and the extent of economic scarring from the pandemic.
Recent economic developments. Supported by a large policy package, Serbia’s economy rebounded quickly from the initial COVID-19 shock, recording a 1 percent contraction of real GDP in 2020. Job losses have mostly been contained to the informal sector, thanks to policy measures aimed at preserving formal employment. A supplementary budget for 2021 was adopted in April boosting capital expenditure and extending policy support to households and corporates, against the background of third and fourth waves of infections and related containment measures, as well as a weaker-than-expected economic recovery in key trading partners. Inflation remains low. After rising again in late February, infections tapered, helped by new containment measures and the rapid vaccine rollout.