It has been ten years since Vladimir Putin’s Customs Union transformed into a new entity called the Eurasian Economic Union, encompassing Armenia, Belarus, Kazakhstan, Kyrgyzstan, and Russia. Earlier in 2024, the Russian president was full of praise for what the union had achieved over the past decade.
“The economic indicators speak for themselves – over ten years, the total GDP of the Eurasian Union states has increased from $1.6tn to $2.5tn, according to available estimates. Trade turnover with third countries increased by 60% from $579bn to $923bn, and the volume of mutual trade almost doubled from $45bn to $89bn,” he said during a summit in Moscow.
So, has it been a great year in this economic bloc? Let us look a bit closer at the state of the Eurasian Economic Union over the past year and what 2025 potentially holds.
A booming economy?
The Eurasian Economic Union (EAEU) was once touted as an alternative to the European Union, but they are conceptually very different entities. The EAEU does not have the same political agenda as the EU, at least not yet. Economically, the ratio of the member states’ economies is far from comparable. The EAEU is dominated by Russia, which has an economy nearly ten times the size of the next member state, Kazakhstan, in terms of nominal GDP.
This is perhaps a slight caveat to consider when looking at how strongly the EAEU entered 2024 – the aggregate growth of GDP across the member states was 3.7%, which Armenia led with 8.7% and Kyrgyzstan with 6.2%. But, given the mathematics of averages and the dominance of one country, the figure that was closest to this aggregate was, in fact, Russia’s own GDP growth rate for the year, 3.6%.
“We are witnessing a boom in investment activity. In fact, investment growth rates are three times higher than the global average,” Sergei Glazyev, Minister for Integration and Macroeconomics of the Eurasian Economic Commission had proudly said at a meeting of the union in February.
This aggregate is expected to be at similar levels for 2025 as well. The Russian Statistics Service recently estimated that the country’s economy would grow by 3.9% this year, and even the International Monetary Fund’s estimate is quite optimistic at 3.6%. IMF estimates for GDP growth in the other EAEU countries are 6.5% for Kyrgyzstan, 6.0% for Armenia, 3.6% for Belarus, and 3.5% for Kazakhstan.
The year also started on a strong foundation for the EAEU following the agreement in December 2023 with Iran, establishing a free-trade zone. An interim free trade agreement had already been in place since 2019, which had led to impressive growth in mutual trade turnover, from $2.4bn in 2019 to $6.2bn in 2022.
The agreement signed a year ago has not fully borne fruit yet, with the Iranian side seeking the establishment of an insurance company under the EAEU’s auspices to provide necessary guarantees for its exports to the region. The agreement has already been ratified by several EAEU members and is expected to be finalised in January 2025.
Meanwhile, several figures from EAEU countries hinted strongly in 2024 that India would be the next country to sign a free trade agreement with their union. Belarus state media reported that their foreign minister, Sergei Aleinik, had discussed this during a visit to New Delhi, “My counterpart confirmed that India is seriously considering starting negotiations on a free trade agreement. Of course, we agreed to maintain contact on this issue.”
Indian media followed up a few months later with confirmation that such an agreement was in the works and could have strategic links to India’s management of the Chabahar Port in Iran.
Read more: India opens the door to Central Asia with ten-year Iran port deal
