FEB. 14 2014 (The Conway Bulletin) — Kazakh President Nursultan Nazarbayev ordered officials to pump $5.4b into the economy from the national reserve fund to boost growth in 2014 and 2015. Mr Nazarbayev said he wanted to maintain growth rates of 6-7%. His interjection underlines the fragile state of Kazakhstan’s economy.
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(News report from Issue No. 172, published on Feb. 19 2014)
FEB. 15 2014 (The Conway Bulletin) — The sudden 20% devaluation of the Kazakh tenge on Feb. 11 generated anger and despair across Kazakhstan.
Police detained roughly 50 protesters in rare antigovernment demonstrations in Astana and Almaty and rumours of an imminent collapse triggered a run on several high street banks.
In central Almaty the manager of a store selling underwear could barely constrain herself. She had no customers and was angry.
“This devaluation is terrible and we don’t want it. In our store, prices will not increase, but the cost of living will surely soar,” she said.
At a clothing store in a busy shopping mall, Gaukhar shared this view.
“This could turn into a nightmare,” said the shop assistant. “While prices will undoubtedly increase, we haven’t heard a word from our directors to raise our wages.”
One of the big fears for Kazakhstan’s policy makers is that rather than making the economy more competitive, the devaluation will simply stoke inflation. Some large industries, including the steel plant owned by the Luxembourg-based ArcelorMittal has already said it will increase its workers’ salaries by 10%.
There were mixed signals in Almaty. Many shopkeepers said that they hadn’t yet put up their prices but that they soon would.
“There’s already been a significant change in prices of between 500 and 1,000 (tenge) per pair of shoes,” said Assel as she tendered to her shop in Almaty’s Green Bazaar. “We’ve seen a lower turnout of customers this past week. They come in, try on the shoes but then go out empty-handed.”
Assel’s shoes were imported mainly from China and an increase of 500 to 1,000 tenge per pair represented a rise of roughly 20%.
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Copyright ©The Conway Bulletin — all rights reserved
(News report from Issue No. 172, published on Feb. 19 2014)
FEB. 15 2014 (The Conway Bulletin) — In the week since the Kazakh Central Bank decided to de-value the tenge by 20%, prices in shops have risen, stoking fears of inflation. A Conway Bulletin correspondent in Almaty interviewed shoppers and stores owners for their feelings on the devaluation.
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Copyright ©The Conway Bulletin — all rights reserved
(News report from Issue No. 172, published on Feb. 19 2014)
FEB. 11 2014 (The Conway Bulletin) — Kazakhstan’s Central Bank devalued the tenge by 20% despite months of denial that it was contemplating a move. Pressure has been mounting on the tenge and other currencies in emerging markets because of a strengthening US dollar.
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(News report from Issue No. 171, published on Feb. 12 2014)
FEB. 11 2014 (The Conway Bulletin) — On what has been dubbed “Black Tuesday”, Kazakhstan’s Central Bank devalued the tenge by 20%.
The sudden move was designed to relieve pressure on the currency, despite Central Bank chief Kairat Kelimbetov saying for months that a devaluation was not on the cards. Last month he even urged Kazakhs to save more in tenge.
With the United States preparing to increase interest rates, the dollar has been strengthening and currencies in emerging markets have been under increased pressure. It had only been a matter of time before the Kazakh tenge flinched but the sudden drop will still have major consequences.
Mr Kelimbetov’s credibility has been badly damaged. He’s only been in the job since October so he’s still a relative novice. Longer term, the depreciation shows the tenge as weak and unstable.
Most of Kazakhstan’s imports are designated in dollars and so inflation is expected to rise fast; the depreciation of the tenge has also wiped out millions of dollars of ordinary Kazakhs’ savings.
This is the second sharp tenge devaluation in five years and there is a real chance that ordinary Kazakhs won’t trust the currency again.
In Almaty, some ATM machines stopped working for a couple of hours after the announcement and shops closed for the day. The public was worried.
Ainur, an Economics undergraduate said she was “concerned about a possible hike of her tuition fees. Gulmira, the administrator of a busy grocery shop, said prices had not yet increased but would soon. Near to her shop, electronics stores had taken down their price tags. Their websites were also closed for business.
On twitter, there has been talk of demonstrations against the devaluation. Feelings are running high.
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(News report from Issue No. 171, published on Feb. 12 2014)
FEB. 6 2014 (The Conway Bulletin) — The falling value of the Russian rouble is decreasing the amount of cash that Uzbeks working in Russia are able to wire home, media reported. Like other Emerging Markets currencies, the rouble has been slipping back against a strengthening dollar over the past few months.
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(News report from Issue No. 171, published on Feb. 12 2014)
JAN. 31 2014 (The Conway Bulletin) — In its 54-page quarterly inflation report, Kazakhstan’s Central Bank said that between July and September 2013 prices rose by only 0.6% — the slowest rate for a decade. Kazakhstan has previously said that it is focusing on battling slowing inflation.
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(News report from Issue No. 170, published on Feb. 5 2014)
JAN. 31 2014 (The Conway Bulletin) — The ratings company Standard & Poor’s gave its assessment of Azerbaijan’s economy. It expected economic growth of about 5% this year but said that there were some risks, especially the high consumer lending levels and growing inflationary pressure.
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(News report from Issue No. 170, published on Feb. 5 2014)
JAN. 31 2014 (The Conway Bulletin) — In its 2014 assessment of Azerbaijan’s economy, the Standard & Poor’s rating agency maintained Azerbaijan’s stable status with GDP growth of around 5%.
Although the World Bank and the Azerbaijani government have already given their predictions for next year, the S&P assessment is important to pick over.
Its forecast was generally in line with others, including the Azerbaijani government and the World Bank.
Where it did differ was on inflation and on potential risks to this growth prediction.
Azerbaijani media reported that S&P said inflation would increase by 4.7% this year compared to 2.4% last year. It also said inflation would rise to 6% in 2015 and over 8% in 2016.
Azerbaijan’s economy is recovering from the shock of the global financial crisis and the government has been looking for an increase in inflation.
It doesn’t, though, want this much inflation.
S&P said there were also other risks to Azerbaijan’s upward economic trajectory. One of these was the high consumer lending rate.
Azerbaijan’s Central Bank has already tried to tackle this by giving increasingly stringent guidelines to its banks on lending to consumers.
S&P also made another positive, and important, observation.
It said that the proportion of savings kept in dollars was dropping as people have increased confidence in Azerbaijan’s own currency. The proportion of savings held in dollars now was around 40%. Compare this to Kazakhstan’s 70%.
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Copyright ©The Conway Bulletin — all rights reserved
(News report from Issue No. 170, published on Feb. 5 2014)
FEB. 3 2014 (The Conway Bulletin) — The proportion of savings held in Kazakh tenge dropped to 62.6% in 2013 from 70.2% a year earlier, media quoted Kazakhstan’s Central Bank chief Kairat Kelimbetov as saying. Mr Kelimbetov said that he wanted to boost this figure and reduce the amount of savings held in US dollars.
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Copyright ©The Conway Bulletin — all rights reserved
(News report from Issue No. 170, published on Feb. 5 2014)
