Most countries in Central Asia and the Caucasus improved their rankings in the latest Global Competitiveness Index published by the World Economic Forum (WEF) on September 28.
The improvement comes despite the fact that most economies in the region face challenges related to the fall in commodity prices, volatile exchange rates, recession in Russia and slowing Chinese economy. “These shocks have affected competitiveness in two major ways: all Eurasian economies except Georgia have seen the value of their exports fall, reducing their total market size; and falling tax and royalties revenues have increased government deficits and public debt,” the report reads.
The Geneva-based WEF's annual ranking is based on data in 12 categories that together provide a comprehensive picture of competitiveness. These 12 factors include infrastructure, market size, innovation, labour market efficiency and technological readiness.
Competitiveness differences in Eurasia remain wide, with the region’s best performer Azerbaijan ranking 37th out of the 138 countries worldwide, while Kyrgyzstan sits near the bottom in 111th position. Azerbaijan climbed three places from last year’s index with the better performance driven by better and more widespread education and reforms that have improved the business environment and goods market efficiency. Some progress has been made in curbing corruption, which nevertheless remains a problem for doing business in the country, the WEF suggests.
Georgia and Tajikistan were the countries that witnessed the strongest improvement. “In both countries GDP is expected to grow by over 2.5% in 2016 – below the average for the past decade, but more than other Eurasian countries,” the report notes.
Georgia jumped seven places to 59th on the bank of improved macroeconomic environment and higher labour market efficiency. Tajikistan started from a lower base, moving up two positions to 77th, with its positive performance mainly driven by better ground transport and electricity infrastructure, less red tape to start a business, and slightly improved institutional environment.
Kazakhstan (53rd) and Kyrgyzstan (111th) declined in the ranking, dropping 11 and nine positions, respectively. “Kazakhstan has lost ground almost exclusively as a result of the worsened situation of public finance, linked to the loss of oil export revenues,” the WEF says. Kyrgyzstan has been severely hit by the recession in Russia, which has reduced its economic activity, increased inflation, and considerably worsened public finances.
Armenia improved its ranking by three spots to take 79th place, while Mongolia, the second worst performer in the region, also witnessed a slight improvement, rising to 102nd position from 104th last year.
Two of the world’s most isolated countries, Uzbekistan and Turkmenistan, were not included in the rankings.