Tag Archives: economy

Comment: Regional economies begin to steady, writes Sorbello

OCT. 7 2016 (The Conway Bulletin) — Central Banks across Central Asia and the South Caucasus seem to have switched off their crisis mode, as inflation slows, oil prices pick up and remittances begin to regenerate.

Excited about the imminent re-start of the Kashagan offshore oil project, Kazakhstan is looking stronger, after months of uncertainty regarding its currency and its budget stability.

An important sign of the country’s recovering health was the rate cut by Kazakhstan’s Central Bank this week, which said that with inflation back into the 6 – 8% band that it was targeting and that monetary policy could be eased.

This decision has been in the Central Banker’s thinking over the past few weeks. That much is clear. Daniyar Akishev has been showing, for the first time, a more confident and determined tone.

And countries less impacted by oil prices, from Armenia to Kyrgyzstan, have also tried to boost their rather slow economic activity by lowering or keeping low interest rates in the past weeks.

All currencies from the region have been hit by a stronger US dollar over the past two years, and their depreciation led inevitably to a sharp increase in consumer prices.

Some — such as Azerbaijan, Kazakhstan, Kyrgyzstan and Georgia — needed strong monetary interventions. Others, such as Tajikistan, Armenia and Uzbekistan stabilised at a comparatively faster pace.

Last month, Russia’s Central Bank said migrant worker remittances to Kyrgyzstan had increased by 21%, reflecting a higher migration rate. On the other hand remittances to Tajikistan and Uzbekistan fell because of a drop in the number of migrants. Perhaps this is the Eurasian Economic Union effect?

Kyrgyzstan and Tajikistan are among the top remittance-dependent countries in the world.

As the ship seems steadier, however, countries across the region will have to cope with more domestic problems, chiefly in the banking sector and other private sectors hit hard by the economic downturn.

As shown this week with the bankruptcy of Bank Standard, Azerbaijan’s financial sector doesn’t seem to have fully recovered from the crisis. And in western Kazakhstan, where oil is the job creator, a month-long strike just ended with the workers obtaining higher salaries and the company winning state tenders. There is still work to do.

By Paolo Sorbello, Deputy editor, The Conway Bulletin

ENDS

(News report from Issue No. 299, published on Oct. 7 2016)

Kazakhstan cuts interest rates

ALMATY, OCT. 3 2016 (The Conway Bulletin) — Kazakhstan’s Central Bank cut interest rates by 50 basis points to 12.5%, its third rate cut this year, saying that slower inflation and a renewed confidence in the local currency were signs of economic recovery.

Most analysts were taken by surprise by the Central Bank’s decision, although Daniyar Akishev, the Bank’s chief, had hinted at possible rate reductions in recent weeks.

And the Central Bank said that another rate cut was likely at the next policy meeting in November .

“If the slowdown in inflation continues and stable growth in tenge deposits is confirmed, a reduction in the base rate before year-end isn’t excluded,” the Bank said its statement on the rate cut.

Inflation, which had reached 17% in annualised terms, has slowed to 5.6% in the first nine months of 2016, prompting the rate cut.

In the past nine months, the tenge/US dollar exchange rate improved by 14%, contributing to increased stability.

The tenge had lost half of its value overnight in August 2015, when the Central Bank ditched the peg to the US dollar. Months of uncertainty followed, sending the tenge further down and prompting successive rate increases.

Since the appointment of Mr Akishev in November last year and the stabilisation in oil prices at around $50, up from $27 at the start of the year, confidence in the country’s economy has slowly strengthened and recovered.

Oil is the cornerstone of Kazakhstan’s economy. The collapse in oil prices from around $110 per barrel in 2014 to $40 had undermined its prospects.

ENDS

(News report from Issue No. 299, published on Oct. 7 2016)

Average income drops in Kazakhstan

SEPT. 30 2016 (The Conway Bulletin) – High inflation over the past year has brought down average income for Kazakhs, according to the Statistics Committee. Average revenues per person in Kazakhstan for the first six months of the year grew by 12% compared to the same period in 2015, but a 16.8% growth in consumer good prices meant that average purchasing power decreased.

ENDS

(News report from Issue No. 299, published on Oct. 7 2016)

Putin deals with Kazakh President

OCT. 4 2016 (The Conway Bulletin) – Russian President Vladimir Putin and Kazakh President Nursultan Nazarbayev met in Astana at the Kazakhstan-Russia Business Forum and signed several bilateral agreements worth $4b. Both parties said they want to boost trade ties. No specific details of the deals were released.

ENDS

(News report from Issue No. 299, published on Oct. 7 2016)

Trade turnover improves in Armenia

OCT. 4 2016 (The Conway Bulletin) – Armenia’s Statistics Committee said that trade turnover improved during the first eight months of the year, compared to last year. Exports increased by 19% to $1.1b, while imports decreased by 2% to just below $2b, reducing the country’s trade deficit. Trade with CIS countries increased, while it remained flat with EU countries.

ENDS

(News report from Issue No. 299, published on Oct. 7 2016)

ADB forecasts Azerbaijan’s GDP

SEPT. 27 2016 (The Conway Bulletin) – The Asian Development Bank (ADB) said that Azerbaijan’s economy will contract by 2.5% this year. Earlier this year, the ADB had forecast a 1% contraction. The Bank said Azerbaijan’s GDP will resume growth in 2017, when it will increase by 1%.

ENDS

(News report from Issue No. 298, published on Sept. 30 2016)

Kyrgyz Central Bank keeps rate unchanged

SEPT. 26 2016 (The Conway Bulletin) – Citing falling prices and signs that the economy is beginning to grow again, Kyrgyzstan’s Central Bank kept interest rates unchanged at 6%. The Central Bank said that only by keeping rates at 6% will it be able to let prices increase gently, within a 5-7% corridor. This year, the Central Bank has reduced interest rates twice from a level of 10% in January.

ENDS

(News report from Issue No. 298, published on Sept. 30 2016)

Armenia’s C Bank cuts interest rates

SEPT. 27 2016 (The Conway Bulletin) – Armenia’s Central Bank cut interest rates by 50 basis points to 6.75%, in an effort to combat deflation. The Bank said that after a positive first half, the economy slowed significantly in Q3. This is the sixth time this year that the Central Bank has cut interest rates. At the beginning of 2016, interest rates stood at 8.75%.

ENDS

(News report from Issue No. 298, published on Sept. 30 2016)

Azerbaijan to have talks with Bulgaria on exports

SEPT. 29 2016 (The Conway Bulletin) – Bozhidar Lukarski, Bulgaria’s minister of economy, will hold talks with an Azerbaijani delegation to explore the possibility of buying 1b cubic metres of gas. SOCAR and Bulgargaz, the two state-owned companies, signed a supply agreement in 2014. So far, however, the Interconnector Greece-Bulgaria, the pipeline through which Azerbaijan’s gas will be pumped, has not been built. Azerbaijan sees exports to Europe as key to growing its client base.

ENDS

(News report from Issue No. 298, published on Sept. 30 2016)

Kazakh economy looking stronger

ALMATY, SEPT. 28 2016 (The Conway Bulletin) — Higher oil prices, cost cuts and the anticipated start-up of the Kashagan oil project will allow the Kazakh government to reduce transfers from the sovereign wealth fund into the budget for the next three years, the ministry of economy said.

For Kazakhs, who have endured two years of economic woe, a heavy devaluation of the tenge and cost cutting, the assessment by the economy ministry that things are finally looking up will come as a relief.

Kuandyk Bishimbayev, minister of economy, appeared before parliament to propose amendments to the 206-2018 budget.

“We had planned the budget with an average oil price of $30/barrel in mind. Now, given the increase over the past few months and the apparent stability at $40/barrel, we should revise the forecast to $35/barrel,” he told parliament. “Every five additional dollars in oil prices give us additional revenue in the form of export customs duties.”

Mr Bishimbayev also highlighted the restart of the Kashagan oil project in the Caspian Sea. Kashagan, the Great White Hope of the Kazakh energy sector, is due to restart oil production at the end of the year after a three year hiatus while leaks to pipes were repaired.

Kazakhstan’s oil production, and therefore income, is due to ramp up as soon as Kashagan comes on- stream.

The original budget plan called for 2,880b tenge ($8.5b) to be shifted from the sovereign wealth fund into the government’s budget. The amended budget cut the transfers by 401b tenge ($1.2b) or 14%.

Unsurprisingly, parliament approved the amendments.

ENDS

(News report from Issue No. 298, published on Sept. 30 2016)