Fitch Ratings said Thursday it expects lower economic growth and higher inflation in the Commonwealth of Independent States (CIS) amid the war between Ukraine and Russia. 

The global rating agency said in a statement that it expects damage from the war to cause a 35% contraction for Ukraine this year, while Belarus’s economy will shrink 10% due to large trade links with Russia, sanctions and challenging financial conditions.

Fitch said it revised down economic growth estimates across the CIS+ region for 2022 but added that oil and natural gas producing and exporting countries will benefit from higher prices.

"This is most apparent in Azerbaijan, which exports gas to Europe and will benefit from strong demand and higher prices," it said. "Turkmenistan currently exports all gas under long-term contracts with a lag in the pricing structure, meaning that much of the price impact will be felt in 2023.”

It anticipates Armenia, Azerbaijan, Georgia, Kazakhstan, Turkmenistan and Uzbekistan economies to grow in 2022 but their estimates are cut by 0.2 to 4 percentage points.

The rating agency, in addition, revised up inflation forecasts for CIS+ countries, as all are expected now to have average inflation rates of more than 8.5% in 2022, due to a combination of higher food and energy prices, and exchange-rate depreciation./aa