Euro zone crisis dents growth in CIS region-IMF

TOKYO, Oct 9 (Reuters) - Growth in the Commonwealth ofIndependent States (CIS) will be lower in 2012 than previouslyforecast due to the impact of crisis-ridden Europe and a dip incommodity prices, the International Monetary Fund said onTuesday.

Global uncertainty and the debt crisis in the euro zone, theCIS's most important outside trading partner, would slow growthto 4 percent in 2012, below a July forecast of 4.1 percent anddown from nearly 5 percent in 2011, the Fund said in itssemi-annual World Economic Outlook report.

Financial conditions in the region's three largest economies-- Russia, Kazakhstan and Ukraine -- have been hit hardest bythe crisis in Europe and general risk aversion, the Fund said,with capital flowing out and stock prices falling.

The IMF forecast growth in the Ukraine, an energy importer,would slow to 3 percent this year from more than 5 percent in2011, as the economy stumbles due to weaker European demand forits exports.

But growth in the CIS, a group of former Soviet republics,was still solid in the first half of the year, and the IMF urgedcommodity exporters like Russia to fill government coffers whileit still can, in case the situation in Europe or worldwideworsens.

Highly reliant on exports of oil, gas, and othercommodities, the CIS is vulnerable to any fall in commodityprices that would accompany a global slowdown.

"The major CIS economies should take advantage of thecurrent, still-robust economic conditions to rebuild fiscalpolicy buffers," the IMF report said.

It is particularly important to maintain growth in Russia,where any shock would reverberate throughout the region viaRussia's deep trade, investment and remittance ties to itsneighbours. Russia's non-oil deficit has more than tripled sincethe global recession.

But government spending, as well as growth in credit, havealso helped Russia weather recent turmoil, the IMF said, and theeconomy is projected to expand 3.7 percent this year and 3.8percent in 2013. Growth was 4.3 percent in 2011.

With lingering global risks, the IMF said CIS countriesshould implement structural reforms and strengthen banks toimprove their ability to withstand future financial shocks.

(Reporting by Anna Yukhananov; Editing by Neil Fullick)


Messaging: anna.yukhananov.thomsonreuters.com@reuters.net))

Keywords: IMF CIS/