promoting inclusive growth in the caucasus and central asia › resources › promoting... · imf |...

16
IMF | Middle East and Central Asia Department 1 Promoting Inclusive Growth in the Caucasus and Central Asia JUNE 2019

Upload: others

Post on 09-Jun-2020

2 views

Category:

Documents


0 download

TRANSCRIPT

Page 1: Promoting Inclusive Growth in the Caucasus and Central Asia › resources › Promoting... · IMF | Middle East and Central Asia Department 6..but challenges ahead. Slower growth

IMF | Middle East and Central Asia Department 1

Promoting Inclusive

Growth in the Caucasus and Central Asia

JUNE 2019

Page 2: Promoting Inclusive Growth in the Caucasus and Central Asia › resources › Promoting... · IMF | Middle East and Central Asia Department 6..but challenges ahead. Slower growth

IMF | Middle East and Central Asia Department 2

Inclusive Growth

Broad sharing of the

benefits of, and the

opportunities for,…

Robust and broad-based

across sectors

Productive employment across the

labor

Protecting the

vulnerable

Equal opportunities in access to

markets access

Concerted

efforts

Shared

responsibility

Page 3: Promoting Inclusive Growth in the Caucasus and Central Asia › resources › Promoting... · IMF | Middle East and Central Asia Department 6..but challenges ahead. Slower growth

IMF | Middle East and Central Asia Department 3

Progress on Promoting Inclusive

Growth in the CCA

Page 4: Promoting Inclusive Growth in the Caucasus and Central Asia › resources › Promoting... · IMF | Middle East and Central Asia Department 6..but challenges ahead. Slower growth

IMF | Middle East and Central Asia Department 4

Some progress with inclusive growth….

Some income convergence

Sources: World Economic Outlook, Regional Economic Outlook, and IMF staff calculations.

Note: EM = Emerging Markets (excluding Emerging Europe), EMDE = Emerging and Developing Europe.

Reduced poverty …and decreased inequality.

0

5,000

10,000

15,000

20,000

25,000

30,000

1992

1994

1996

1998

2000

2002

2005

2007

2009

2011

2013

2015

2017

GDP per capita(PPP, in constant 2011 international dollars)

CCA OE CCA OI EM EMDE

0

10

20

30

40

50

60

70

80

EMDA TJK KGZ GEO ARM EMDE KAZ

Headcount Poverty Rate(Consumption below US$ 3.2 a day, percent of population)

2001 2008 2016

20

25

30

35

40

45

GEO TJK EMDA ARM EMDE KAZ KGZ

GINI Coefficient(Gini coefficient of zero expresses perfect equality)

2001 2008

Page 5: Promoting Inclusive Growth in the Caucasus and Central Asia › resources › Promoting... · IMF | Middle East and Central Asia Department 6..but challenges ahead. Slower growth

IMF | Middle East and Central Asia Department 5

With high labor market participation…

Labor participation is already elevated… …and there is a persistent gender gap

Sources: International Labor Organization, and IMF staff calculations.

Note: EMDE = Emerging and Developing Europe, EMDA = Emerging and Developing Asia.

0

10

20

30

40

50

60

70

80

2000

08

17

2000

08

17

2000

08

17

2000

08

17

2000

08

17

2000

08

17

2000

08

17

2000

08

17

2000

08

17

ARM AZE GEO KAZ KGZ TJK TKM UZB EMDE

Labor Force Participation Rate(Percent)

Total Female Youth

0

10

20

30

40

50

60

70

80

90

CCA CCA OI CCA OE EMDE EMDA

Labor Force Participation, 2018(Percent, ILO modeled estimates)

Female labor force participation

Ratio of female to male labor force participation rate

Page 6: Promoting Inclusive Growth in the Caucasus and Central Asia › resources › Promoting... · IMF | Middle East and Central Asia Department 6..but challenges ahead. Slower growth

IMF | Middle East and Central Asia Department 6

..but challenges ahead.

Slower growth

Sources: World Economic Outlook, Regional Economic Outlook, and IMF staff calculations.

Note: EM = Emerging Markets (excluding Emerging Europe), EMDE = Emerging and Developing Europe.

Low productivity growth High economic concentration

0

10

20

30

40

50

60

70

AZE TJK UZB KGZ KAZ ARM GEO

Share of Top 3 Industries in Value Added(Percent of total)

2010 2017

-2

0

2

4

6

8

10

12

2001-08 2009-17 2001-08 2009-17

CCA OI CCA OE

Growth Decomposition(Average percent)

Capital Labor TFP0

2

4

6

8

10

12

14

16

2000 2003 2006 2009 2012 2015 2018 2021 2024

CCA Real GDP Growth 1/

(Percent Change)

2000-08

Average 10.1%

2009-14

Average 5.7%

2015-24

Average 4.1%

Projection

Page 7: Promoting Inclusive Growth in the Caucasus and Central Asia › resources › Promoting... · IMF | Middle East and Central Asia Department 6..but challenges ahead. Slower growth

IMF | Middle East and Central Asia Department 7

Growth has not been job rich, nor provided equal opportunity.

0

5

10

15

20

25

30

2000 05 10 16 2000 05 10 16

CCA OE CCA OI

Unemployment Rate(Percent of Labor Force)

Total Female Youth

Sources: International Labor Organization, and IMF staff calculations.

Note: CCA OE = CCA Oil Exporter, CCA OI = CCA Oil Importer .

20

30

40

50

60

70

2000 05 10 16 2000 05 10 16

CCA OE CCA OI

Labor Force Participation(Percent of Population Age 15+)

Total Female Youth

Page 8: Promoting Inclusive Growth in the Caucasus and Central Asia › resources › Promoting... · IMF | Middle East and Central Asia Department 6..but challenges ahead. Slower growth

IMF | Middle East and Central Asia Department 8

Policies to Promote Inclusive

Growth in the CCA

Page 9: Promoting Inclusive Growth in the Caucasus and Central Asia › resources › Promoting... · IMF | Middle East and Central Asia Department 6..but challenges ahead. Slower growth

IMF | Middle East and Central Asia Department 9

Multifaceted Approach

Reorienting fiscal policy

Improving governance

and business environment

Supporting financial inclusion

Page 10: Promoting Inclusive Growth in the Caucasus and Central Asia › resources › Promoting... · IMF | Middle East and Central Asia Department 6..but challenges ahead. Slower growth

IMF | Middle East and Central Asia Department 10

I. Reorienting Fiscal Policy: Mobilizing Revenues

0

5

10

15

20

25

30

GE

O

KG

Z

AR

M

TJK

UZ

B

AZ

E

KA

Z

TK

M

EM

Eu

rop

e

Low

er

mid

dle

in

com

e

Up

per

mid

dle

in

com

e

General Government Revenues(Percent of GDP)

Other income

Unclassified Taxes

International Trade

General Goods and Services

Corporate Income

Personal Income 0 10 20 30 40 50 60

EMDE

KGZ

KAZ

ARM

TJK

AZE

GEO

Size of the Shadow Economy, 2015 1/

(Percent of GDP)

Sources: IMF FAD Revenue Analysis Tool, IMF FADTP Rates Database, IMF 2018f WP/18/17, and IMF staff calculations.

Note: EMDE = Emerging and Developing Europe.

1/ Size of the economy estimated using the MIMIC approach, for more information on the methodology please see IMF 2018f WP/18/17.

CIT and VAT Rates, Productivity, Efficiency and

Thresholds

CIT ProductivityVAT C-

Efficiency

VAT

Productivity

Latest Available

(Scale of 0-1, where 1 is best)

ARM0.13 0.47 0.38

AZE0.20 0.58 0.36

GEO0.21 0.73 0.54

KAZ0.21 0.42 0.27

KGZ0.20 0.74 0.71

TJK0.10 - -

TKM- - -

UZB0.73 0.72 0.30

EMDE0.15 0.61 0.44

Improving tax efficiencyIncreasing revenues Broadening tax base

Page 11: Promoting Inclusive Growth in the Caucasus and Central Asia › resources › Promoting... · IMF | Middle East and Central Asia Department 6..but challenges ahead. Slower growth

IMF | Middle East and Central Asia Department 11

I. Reorienting Fiscal Policy: Prioritizing Spending

6

8

10

12

14

CCA EMDE EMDA

Expected and Learning-Adjusted Years of Schooling, 2018 1/

Expected: total Expected: male

Expected: female Adjusted

Sources: World Bank Human Capital Index, IMF FAD EAT Database, EBRD and IMF staff calculations.

Note: EMDE = Emerging and Developing Europe, EMDA = Emerging and Developing Asia.

1/ The learning-adjusted years of schooling attempts to capture quality of education, reflecting that childen in some countries learn less than others, despite being in school for the same time. It multiplies

estimated years of schooling by the ratio of most recent harmonized test scores on the TIMSS. TKM and UZB not included in CCA averages due to data availability. AZE not included in CCA average breakdown

by gender.

ARM

AZEGEO

KAZ

KGZ

TJK

TKM

UZB

Emerging Markets

OECD

40

45

50

55

60

65

70

75

80

0 1000 2000 3000 4000

He

alth

-Ad

juste

d L

ife

Exp

ecta

ncy, 2

01

5

Total health expenditure per capita, PPP$

Health Efficiency Frontier(Latest Value Available)

0

5

10

15

20

25

CCA OI CCA OE EM Europe

Total Investment Needs, 2018-22 (Percent of GDP per year)

Education Health Investment needs

Page 12: Promoting Inclusive Growth in the Caucasus and Central Asia › resources › Promoting... · IMF | Middle East and Central Asia Department 6..but challenges ahead. Slower growth

IMF | Middle East and Central Asia Department 12

II. Supporting Financial Inclusion: Households

• Only 45 percent of adults in CCA have

access to finance.

• 3% in mobile accounts despite elevated

mobile phone ownership (71-92% range).

• The gender gap (1/2 EMs) has doubled since

2014.

• 1/3 among poor have an account; about ½ in

the richest 60 percent households.

• Vague credit history, large interest rate

spreads, high collateral requirements

Source: Global Findex Database 2017, and IMF staff calculations.

Note: EMs = Emerging Markets excluding Emerging Europe. EMDE = Emerging and Developing Europe. CCA OE = CCA Oil Exporter. CCA OI = CCA Oil Importer.

0

10

20

30

40

50

60

70

80

90

2011 14 17 2011 14 17 2011 14 17 2011 14 17 2011 14 17

CCA OI CCA OE EMDE EMs World

Adults with an Account(Percent)

Mobile money accounts only

Financial institution and mobile money accounts

Financial institution account only

Page 13: Promoting Inclusive Growth in the Caucasus and Central Asia › resources › Promoting... · IMF | Middle East and Central Asia Department 6..but challenges ahead. Slower growth

IMF | Middle East and Central Asia Department 13

II. Supporting Financial Inclusion: Small and medium firms contribute to growth but face financing constraints

-5

-4

-3

-2

-1

0

TJK

KA

Z

AZ

E

UZ

B

KG

Z

GE

O

AR

M

EM

DA

EM

DE

CCA

SME Financial Inclusion Gaps(Relative to 90th percentile)

CCA Average

Source: Global Findex Database 2017, and IMF staff calculations.

Note: EMs = Emerging Markets. EMDE = Emerging and Developing Europe. EMDA = Emerging and Developing Asia. LAC = Latin America and the Caribbean. SSA = Sub Saharan Africa. MENAP = Middle

East, North Africa, Pakistan and Afghanistan.

0

5

10

15

20

25

30

35

EMDA EMDE SSA LAC MENAP CCA

Bank Lending by Sector, 2016/7

(Percent)

SME contribution to growth …is constrained by financing… …relatively more than other regions

0

10

20

30

40

50

60

70

Ad

van

ce

d

UZ

B

KG

Z

CC

A A

ve

rage

EM

s

AZ

E

KA

Z

SME Contribution to GDP, 2014/15 (Percent)

Page 14: Promoting Inclusive Growth in the Caucasus and Central Asia › resources › Promoting... · IMF | Middle East and Central Asia Department 6..but challenges ahead. Slower growth

IMF | Middle East and Central Asia Department 14

II. Supporting Financial Inclusion: Benefits from SME financial inclusion

0.0

0.1

0.2

0.3

TJK KAZ AZE KGZ UZB

Growth Benefits of Closing the SME Financial

Inclusion Gaps to Global Median(Increase in real GDP, percentage points)

0.0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

1.6

1.8

All Firms Small Firms MediumFirms

Large Firms

Employment Growth Gains from Access to

Formal Finance 1/(Percentage points)

0.0

0.5

1.0

1.5

2.0

2.5

3.0

All Firms SMEs Large Firms

Labor Productivity Growth Gains from Access to

Formal Finance 1/(Percentage points)

Source: Haver, World Bank Enterprise Surveys, and IMF staff calculations.

1/ Details on the estimates can be found in Annex 5 of IMF Departmental Paper 19/02.

Macro-Level Analysis Firm-Level Analysis

Page 15: Promoting Inclusive Growth in the Caucasus and Central Asia › resources › Promoting... · IMF | Middle East and Central Asia Department 6..but challenges ahead. Slower growth

IMF | Middle East and Central Asia Department 15

III. Improving Governance

CCA is lagging compared to peers… …and needs to tackle corruption.

-1.5 -1 -0.5 0 0.5 1

Voice and Accountability

Political Stability and AbsenceViolence/Terrorism

Government Effectiveness

Regulatory Quality

Rule of Law

Control of Corruption

Governance Indicators, 2017(In units of a standard normal distribution)

CCA EMDE

Source: Transparency International, Worldwide Governance Indicators, and IMF staff calculations.

Note: EMDE = Emerging and Developing Europe. EMDA = Emerging and Developing Asia. LAC = Latin America and the Caribbean. SSA = Sub Saharan Africa. MENAP = Middle East, North Africa,

Pakistan and Afghanistan.

0

10

20

30

40

50

60

EMDE LAC MENAP EMDA SSA CCA

Corruption Perception Index(Lower score indicates high perceived level of public corruption)

Page 16: Promoting Inclusive Growth in the Caucasus and Central Asia › resources › Promoting... · IMF | Middle East and Central Asia Department 6..but challenges ahead. Slower growth

IMF | Middle East and Central Asia Department 16

Thank you!