The CIS Outlook remains highly appealing relative to most emerging markets across EMEA, with the region effectively having recovered all its lost growth in 2020 and enjoying improving economic activity into 2022. Thanks to high commodity prices, budgets across the region are performing strongly, underpinning heightened government spending throughout 2021 and in 2022, with a focus on social support, healthcare, education, and infrastructure.

Healthier labor markets and solid real incomes underpin strong consumer spending prospects across the region, while business investment and output are set to improve further. Businesses will have to manage a high-cost environment across their supply chains and entire route to market, creating difficulties in raising prices, at least through the first half of 2022. The primary risks executives should monitor relate to integration plans between Russia and Belarus, as well as the moderate downside risk of harsh US sanctions against Russia, which would weaken the ruble and investor activity.

The region will enjoy consistent, strong growth in 2022

Having effectively recovered all the lost growth of 2020 in 2021, CIS markets are set for resilient growth in 2022, exceeding demand potential of most regions globally. Higher commodity prices, resilient consumer spending, and sustained external demand will ensure solid, consistent demand across the region. Lower political risks further support the broad-based growth the region is set to enjoy.

Consumer spending will maintain its solid momentum, with recoveries in local labor markets

Consumer spending across the CIS region will extend its solid performance of 2021 into 2022, with labor markets, incomes, remittances, and currencies all expected to strengthen further. Lower pandemic-related restrictions in most countries starting in early 2022 will help drive up sentiment consistently across the year. Still, high food and energy prices will ensure some demand hesitancy, price sensitivity, and a focus on value for most consumer segments.

Higher commodity prices will allow budget spending to exceed plans again in 2022

Higher-than-planned spending and lower-than-planned deficits in 2021 will also define 2022, thanks to accelerating energy prices and rising tax receipts. In particular, social spending, healthcare, education, and infrastructure are seeing notable hikes in budgets next year, while ad hoc spending increases over the year will ensure solid B2G demand as well as offer a foundation for B2C and B2B demand.

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