The Asian Development Bank (ADB) revised its economic growth forecast upwards for the countries of Central Asia and South Caucasus this year.

The growth forecast for the region was increased to 4.1 percent in 2021 from a previous projection of 3.6 percent in July and 3.4 percent in April.

The ADB’s previous outlooks were published in July and April, when the bank said that countries of the South Caucasus and Central Asia would get back to growth this year, along with other world economies, after suffering economic contraction caused by the impact of the COVID-19 pandemic.

“A better-than-expected recovery is anticipated in Central Asia. The sub-region turned in a strong economic performance in the first half, amid the continued recovery in commodity prices. Because of this, the growth forecast is revised up to 4.1 percent from the earlier projection of 3.4 for 2021 and to 4.2 percent from 4.0 percent for 2022,” the ADB said in a report.

The bank said that the growth outlook had improved in Armenia, Azerbaijan, Georgia, Kazakhstan, and Uzbekistan.

“Nevertheless, several economies have been hit by a new wave of COVID-19 and re-imposed lockdowns, and other restrictions. These developments, along with slow vaccine rollouts, pose a risk to Central Asia’s growth prospects,” it added.

The ADB forecasts 5.2 percent growth in Armenia, 2.2 percent – in Azerbaijan, 8.5 percent – in Georgia, 3.4 percent – in Kazakhstan, 3.5 percent in Kyrgyzstan, 5.0 percent – in Tajikistan, 4.8 percent – in Turkmenistan and 5.0 percent – in Uzbekistan in 2021.

The ADB said that inflation this year was expected to be higher in Central Asia -the forecast for Central Asia’s inflation this year is revised up to 7.7 percent from a previous projection of 6.8 percent.

“After higher-than-expected price increases in the first 6 months, inflation projections for 2021 are raised in seven sub-regional economies—Armenia, Azerbaijan, Georgia, Kazakhstan, the Kyrgyz Republic, Tajikistan, and Turkmenistan,” the bank said.

The revisions are largest in Georgia, Kazakhstan, and Turkmenistan, contributing 0.6 percentage points to the sub-regional average.

According to the bank, factors driving the acceleration vary across economies, but they are generally caused by higher food and other commodity prices, currency depreciation and a stronger than expected recovery in aggregate demand.

The ADB projects 5.5 percent inflation in Armenia, 4.5 percent – in Azerbaijan, 9.5 percent – in Georgia, 6.9 percent – in Kazakhstan, 10.0 percent – in Kyrgyzstan, 9.5 percent – in Tajikistan, 10.0 percent – in Turkmenistan and 10.0 percent – in Uzbekistan in 2021.