The Effects of Energy Price Shocks on Growth and Macroeconomic Stability in Selected Energy-Importing CIS Countries

After several years of low and stable prices for its gas exports to CIS countries, Russia has decided to review these arrangements and to significantly increase prices, bringing them closer to the levels applied to the EU. The steep increase in energy prices has significant economic implications for the importing countries. So far, the economic analysis has tended to adopt a country-specific focus. We adopt a crosscountry perspective instead, comparing the macroeconomic effects of the energy-price shock on growth, macroeconomic stability, budget and balance of payments. The analysis shows that the expected negative effects associated with the gas price shock have not led to a GDP loss in any of the countries studied, mainly due to a combination of counterbalancing factors. However, some of these developments may raise concerns for the future. In particular the steep increase in private and quasi-private external debt observed over 2006 in most countries increases their vulnerability to future exogenous shocks, including further raises in energy prices