Tradeflow Study - UNDP Black Sea Trade and Investment Promotion ...

I. BSEC Economic Performance and Trade Cooperation
I.1. Trade and Investment Context
The BSEC represents a huge market of some 350 million people with a foreign trade capacity
of over US$ 300 billion annually, an area of nearly 20 million square kilometres and rich in
natural resources, and one of the European Union’s major energy supplier. Owing to its
geographical location, the markets in the region could quite easily be integrated to the
important markets of Europe, Central Asia and/or the Middle East. The BSEC region is a
sizeable market by any criteria, and as such, is an attractive destination for both trade and
investment in several obvious areas such as transportation, communications, energy and
tourism.
The most populous country in BSEC is the Russian Federation with 143 million inhabitants,
followed by Turkey (73 million) and Ukraine (47 million). The populations of the BSEC
countries add up to 350 million, which is around three quarters of the size of the population of
the European Union (460 million) but significantly larger than the USA (297 million).
In terms of land area, the Russian Federation accounts for the largest surface area (17.1
million square kilometres), followed by Turkey (0.8 million square kilometres) and Ukraine (0.6
million square kilometres). However most of the surface area in Russia is not arable, in
comparison to Turkey and Ukraine which have higher relative shares of arable land.
The size of the BSEC market is significant, at around US$ 1.6 trillion in 2005. However, there
are major disparities in the size of economies across the region. Three countries, Greece, the
Russian Federation and Turkey, alone constitute 83 % of BSEC’s GDP. On the other hand,
five countries contribute less than 1% of BSEC’s GDP (Albania, Armenia, Azerbaijan, Georgia
and Moldova). The estimated growth rate in 2006 for the region is high, with the highest
annual growth rate of GDP originating in Azerbaijan (25 %). Armenia is estimated to have
recorded 8.5% growth in 2006, followed by Georgia with 7.5%. The lowest economic growth
has been recorded for Moldova (3.5%) 3 . Figure 1 highlights some of the basic
macroeconomic indicators of the region and illustrates the great diversity of economies in the
region, both in terms of GDP and in current account performance.
3 EBRD Statistics
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