NOV. 6 2014 (The Conway Bulletin) – The Asian Development Bank (ADB) has predicted that inflation in Kyrgyzstan will hit 10% in 2015 after it joins the Russia-led Eurasian Economic Union. The biggest jump in prices, the ADB said, will be a 30% rise in petrol when prices are brought into line with Kazakhstan and Russia.
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(News report from Issue No. 208, published on Nov.12 2014)
NOV. 11 2014 (The Conway Bulletin) – In a speech to the nation, Kazakh president Nursultan Nazarbayev ordered Kazakhstan’s government to spend more money on infrastructure projects to counter the drag caused by a slowing Russian economy and falling oil prices.
The hastily arranged policy speech caught observers by surprise. Mr Nazarbayev usually waits until his state-of- the-nation speech in January to unveil new policy.
“The tough times for which we prepared ourselves with the National Oil Fund have come. It’s time to use these reserves,” he said during his combative address.
Kazakhstan has amassed a sovereign wealth fund of roughly $77b to counter downturns in commodity prices — the economy is mainly reliant on oil and gas exports — as well as to defend the tenge currency when it is under pressure from a falling rouble.
And Mr Nazarbayev is acutely aware that economic progress is a cornerstone of his popularity.
Mr Nazarbayev pledged to inject $3b every year into Kazakhstan’s economy, during 2015/17. He also said that inter-governmental banks have pledged to match this cash injection.
“The investment from the National Fund must be necessarily accompanied by structural reforms,” he said. “This money will be channelled to develop transport, energy, industrial and social infrastructure.”
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(News report from Issue No. 208, published on Nov.12 2014)
NOV. 3 2014 (The Conway Bulletin) – Inflation in Georgia eased to an annual rate of 3.4% in October, down from 4.8% in September, the national statistics office reported. Although other economies in the region are suffering with the downturn in Russia’s economy, Georgia’s is relatively buoyant.
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(News report from Issue No. 207, published on Nov. 5 2014)
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OCT. 27 2014 (The Conway Bulletin) – Tajikistan’s GDP has fallen by 0.8% this year compared to 2014, the World Bank said, more evidence that economies closely-linked to Russia are suffering from sanctions imposed by the West.
The World Bank said that a fall in remittances from Tajik workers in Russia had translated into weaker domestic demand for goods.
“A Russian slowdown affects Tajikistan largely through the remittances channel,” the World Bank wrote in its report.
“A slackening in remittances weighs heavily on household demand, notably demand for services and housing construction.”
This is particularly worrying for Western countries which are counting on a strong and stable Tajikistan to act as a bulwark against any movement by the Taliban northwards into Central Asia from Afghanistan.
Most of the former Soviet Union has been hit by Western sanctions imposed on Russia because of its alleged intervention in the Ukraine civil war but the World Bank also said that a generally weak global demand for industrial goods was impacting Tajikistan too.
It said that industrial growth had fallen to 3% from 7% a year earlier because of low global industrial demand and falling cotton and aluminium prices.
These sentiments mirror the Tajik Central Bank. Both also predicted that inflation would gradually become an increased concern in Tajikistan.
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(News report from Issue No. 206, published on Oct. 29 2014)
OCT. 27 2014 (The Conway Bulletin) – Kyrgyz president Almazbek Atambayev has said inflation will increase in Kyrgyzstan when it joins the Customs Union, which is morphing into the Eurasian Economic Union next year. He also said the country no alternative to joining the Russia-led economic bloc, highlighting the Kremlin’s tightened grip over Kyrgyzstan.
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(News report from Issue No. 206, published on Oct. 29 2014)
OCT. 28 2014 (The Conway Bulletin) – Houses prices in Kazakhstan rose by nearly 10% last year, media quoted the IMF as saying, one of the biggest rises in the world. The spike was far higher in Almaty. Economists have warned of a bubble in Kazakhstan’s housing market.
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(News report from Issue No. 206, published on Oct. 29 2014)
OCT. 17 2014 (The Conway Bulletin) – With the rouble under increased pressure it has become likely, analysts have said, that the Kazakh government will devalue its currency for the second time this year.
Halyk Bank placed the tenge on a negative watch. The report, no longer available on the website of Halyk’s Financial Department, said the tenge would be around 210/$1 by the end of the year compared to 183/$1 currently. That’s a drop of around 10%.
“In the last three days conditions in Tenge-denominated money markets deteriorated sharply,” Halyk Bank wrote.
“Such changes usually happen before devaluations: demonetization, declining demand for Tenge- denominated assets, the rising cost of holding Tenge mirrored by the rising costs of borrowing, all illustrating a loss of confidence and the deepening of the currency crisis.”
Sabit Khakimzhanov, head of research at Halyk Bank and author of the report, attributed the weakening of the tenge to rising interest rates, rouble trouble, and oil prices below $95 per barrel.
The note will have irritated the Kazakh Central Bank which has been denying that it is planning a second devaluation of its currency. Khakimzhanov said that, unusually, an unnamed party had been buying $200m worth of tenge every day. This, analysts suspected, was the Central Bank trying to shore up its currency.
And, rather mysteriously, a few days after it was put up on its website, the currency note disappeared. Analysts at Halyk Bank told the Conway Bulletin that it was a management decision to take down its report.
Earlier this year, the government devalued the tenge overnight by 20%.
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(News report from Issue No. 205, published on Oct. 22 2014)
OCT. 13 2014 (The Conway Bulletin) – Azerbaijan will increase its defence spending next year by just over 3%, keeping up with inflation, IHS Janes Defence reported quoting the Azerbaijani finance ministry. Azerbaijan has been increasing its defence spending through the last few years.
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(News report from Issue No. 204, published on Oct. 15 2014)
SEPT. 18 2014 (The Conway Bulletin) – Uzbekistan’s government announced new electricity power price rises, the second of the year, from Oct. 1.
Like other Central Asian economies, sanctions on Russia have hit Uzbekistan too. Uzbek infrastructure is also groaning under increased demand, triggering energy shortages. Petrol shortages have also been reported for the past year.
Now Uzneftgaz, the state energy company, has said that prices for gas will rise by 10%. Water and heating prices will also rise by 7%.
These increases follow a 9% rise in April and analysts will be monitoring closely people’s reaction.
Rising utility prices can trigger widespread social unrest and with Uzbekistan in a state of flux it is vulnerable. The apparent arrest of Uzbek president Islam Karimov’s eldest daughter, Gulnara Karimova, on various economic charges has unsettled politics and petrol shortages coupled with utility price increases have hit its economy.
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(News report from Issue No. 201, published on Sept. 24 2014)
SEPT. 11 2014 (The Conway Bulletin) – Tajikistan’s Central Bank expects official inflation to hit 7.5% this year, double the figure for 2013, the ASIA-Plus website reported quoting a source at the Central Bank. Rising prices will place increased pressure on the authorities. Basic services are already strained in Tajikistan.
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(News report from Issue No. 200, published on Sept.17 2014)
