Tag Archives: economy

Comment: Remittance drop

JULY 23 2015 (The Conway Bulletin) — For Kyrgyzstan, gold is its most important commodity, the Kumtor gold mine in the east of the country is its most important mine and Switzerland is its most important export market.

Last week, the government released data on trade turnover, which showed a marginal downturn, due mostly to the regional crisis triggered by the downfall of the rouble. A strong dollar and low oil prices have damaged the economic outlook for the whole region, especially for countries, like Kyrgyzstan, which rely heavily on foreign remittances. It was not a surprise to see trade shrink by 12% in January-May 2015, as compared to the same period last year.

An accurate data analysis, however, also told of another underlying story. Out of the eight major markets for Kyrgyz exports, the only two to grow were Switzerland (2.2 times larger than in 2014) and the British Virgin Islands (almost 4 times larger).

Centerra Gold, owners of the Kumtor gold mine, had a much better start in 2015 than it had in 2014 and trade with Switzerland, the main importer of Kyrgyz gold, was automatically boosted. Switzerland now accounts for 48% of Kyrgyz exports.

Kyrgyzstan is heavily betting on Switzerland to keep its cash flow steady. The one warning sign on the horizon is that gold has dipped to a 5-year low.

By Paolo Sorbello, Deputy Editor, The Conway Bulletin

ENDS

(News report from Issue No. 241, published on July 23 2015)

Iran deal to boost steelmakers in Kazakhstan

JULY 20 2015 (The Conway Bulletin) – Lifting of international sanctions against Iran will give Kazakhstan’s steelmaking industry, and the ArcelorMittal plant at Temirtau in particular, a boost, Asset Isekeshev, Kazakh minister for industrial development, said.

ArcelorMittal Temirtau, near Karaganda, is one of the most important factories in Kazakhstan outside the oil and gas sector but it has struggled recently because of a drop in demand for steel from Iran.

“The lifting of sanctions against Iran could be a big plus for ArcelorMittal. This is a big market for us and this would allow us to stabilise operations,” Mr Isekeshev said at a press conference.

According to officials from ArcelorMittal Temirtau, Iran makes up around a third of its export market. Over the past few years, ArcelorMittal has tried to cut costs at the plant. It has laid-off thousands of workers and imposed salary cuts.

A new railway transport route from Kazakhstan, across Turkmenistan into Iran should also help ArcelorMittal exports.

ENDS

(News report from Issue No. 241, published on July 23 2015)

Comment: Iran deal will give Central Asia an economic boost

JULY 23 2015 (The Conway Bulletin) – Many Central Asian countries have pledged their support for a deal between Iran and Western countries over its nuclear programme that will allow sanctions to be lifted. The positive feeling is mutual. In April 2015, Iran’s Foreign Minister noted that there is “no ceiling for the expansion of relations with regional countries, whether in the Caucasus or in Central Asia”.

Central Asia and Iran have already been cooperating for some time.

December 2014 saw Europe via Iran the inauguration of the new Iran-Turkmenistan-Kazakhstan railroad, linking Central Asia to Iran’s southern ports. Iran has oil swap deals with both countries.

Turkmenistan also has gas pipelines running to Iran and in 2010 Iran sent equipment to Tajikistan for the construction of the Sangtuda-2 hydro- power plant.

Increased formal, and more flexible, cooperation will certainly benefit Central Asia. Iran will give Central Asia greater access to Middle Eastern and European markets. The energy export potential is attractive, particularly given that last year Russia said it would stop buying Central Asian gas, and Turkmenistan recently accused Gazprom of failing to pay debts. Supplying Europe with gas via Iran may be more feasible for Turkmenistan. The opening up of Iran also provides another legitimate partner in the region to counterbalance Russian and Chinese dominance, as is a key aim of the region’s “multi-vector foreign policy”.

However, it will also produce new competition in the region. In August 2014, before any nuclear deal was signed, Iran announced it would no longer import gas from Turkmenistan, instead building up domestic production. Having been excluded from markets for so long, Iran will want to build up its own trade partners rather than act as a transit country for Central Asia. Moreover, more Iranian oil on the market may cause a drop in oil prices, impacting Kazakhstan at already difficult times.

One thing is certain — new transport and energy infrastructure will need to be built for any Iranian reintegration to take place. China will no doubt be looking with interest at the opportunities this presents.

By Sarah Lain, Research Fellow at the Royal United Services Institute in London

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(News report from Issue No. 241, published on July 23 2015)

Georgian parliament passes banking law

JULY 17 2015 (The Conway Bulletin) – Georgia’s parliament passed a final reading of a bill that strips supervision of the country’s commercial banking sector from the Central Bank. The World Bank had urged the government to drop the bill. President Giorgi Margvelashvili now has to sign the bill into law although he has said he may veto it.

ENDS

(News report from Issue No. 241, published on July 23 2015)

Uzbekistan claims GDP growth

JULY 23 2015 (The Conway Bulletin) – Shavkat Mirziyoyev, Uzbekistan’s PM, said GDP grew by 8.1% in the first half of 2015, compared to 2014. Given the secretive nature of the country, Uzbekistan’s official statistics have to be treated with skepticism.

ENDS

(News report from Issue No. 241, published on July 23 2015)

Chinese workers increase in Kazakhstan

JULY 21 2015 (The Conway Bulletin) – The number of Chinese migrants working in Kazakhstan doubled this year, according to the Kazakh ministry of labour. More than 12,000 Chinese labourers work in Kazakhstan, a third of the total foreign workforce. The increase shows how important Kazakhstan has become for China.

ENDS

(News report from Issue No. 241, published on July 23 2015)

Georgia’s parliament passes new budget cuts

JULY 17 2015 (The Conway Bulletin) – Highlighting the recent economic downturn across the region, Georgia’s parliament passed a new budget for 2015 that cut government spending and reduced projected GDP growth of the country to 2% from 5%.

ENDS

(News report from Issue No. 241, published on July 23 2015)

Tajik inflation falls

JULY 14 2015 (The Conway Bulletin) – The Central Bank said inflation in Tajikistan for the first half of 2015 stood at 2.6%. In the same period in 2014, inflation measured 4.5%. Tajikistan’s economy is faltering under a drop in remittances from Russia.

ENDS

(News report from Issue No. 240, published on July 16 2015)

Mine blasts in Uzbekistan

JULY 16 2015 (The Conway Bulletin) – A blast at a gold mine around 90km southeast of Tashkent has killed 25 people, local media reported. The blast occurred on July 13 at the village of Kochbulak. Reports said the blast was linked to a ownership dispute.

ENDS

(News report from Issue No. 240, published on July 16 2015)

Money transfers to Georgia drop

JULY 16 2015 (The Conway Bulletin) – TBILISI — Overall money transfers to Georgia in the first half of 2015 declined by 22.7% to $538m, media reported quoting the sta- tistics agency, a heavy dent in Georgia’s overall income.

Remittances from Russia, which is suffering from a downturn in its economy, dropped by over 40% to $204m and from Greece, which is teetering on the edge of bankruptcy, by 19% to $83m.

Last year, the data showed, remittances accounted for nearly 9% of Georgia’s overall GDP, a figure which highlights their importance to the country.

Georgia’s lari currency has also lost around 25% of its value since November 2014, putting more pressure on the economy.

ENDS

(News report from Issue No. 240, published on July 16 2015)