Tag Archives: economy

Uzbek president warms to Putin

JULY 19 2015 (The Conway Bulletin) – At a meeting of the Shanghai Cooperation Organisation (SCO) in Ufa, Russia, Uzbek leader Islam Karimov spoke unusually warmly about relations with Russia.

Mr Karimov veers from near- hostility towards Russia to extreme warmth.

Russian television showed Russian President Vladimir Putin greeting Mr Karimov.

“You haven’t been here on a state visit for a long time,” he said.

Mr Karimov shook his hand and replied: “Whatever disputes we may have, nobody can make Russia and Uzbekistan quarrel as we have common interests.”

Mr Karimov’s last state visit to Russia was in April 2013. Most Central Asia and South Caucasus leaders, other than those from Georgia and Turkmenistan, are semi-regular visitors to Moscow.

The Uzbek head of state’s manoeuvres are understandable.

Uzbekistan may be improving its relations with the West, especially with regards to allowing NATO countries to ship their military kit out of Afghanistan, but Russia is still the regional superpower and Mr Karimov needs its help economically as well as to bolster security along its porous southern border where he says the Taliban are massing.

ENDS

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

Kazakh Central Bank widens tenge trading corridor

Kazakhstan’s Central Bank chief Kairat Kelimbetov extended the bandwidth that the tenge could trade against the US dollar to 182-198 from 182-188, effectively giving it room to devalue by over 5%.

Hours after Mr Kelimbetov’s statement, exchange bureaus in Kazakhstan had already upped the price of $1 to over 188 tenge, breaking the psychological 187 value it had been pegged around for so long.

A drop in the value of the Russian rouble and the price of oil has pressured the tenge. The Kazakh Central Bank has stood firm, though, and defended the value of its currency while neighbours have devalued.

Still, Mr Kelimbetov said external pressures had triggered the bandwidth extension and that the move was designed to shift the tenge towards a full free-float over the next 12 months.

“This corridor allows the currency to fluctuate independently of the negative scenarios that may take shape outside Kazakhstan,” he said.

Mr Kelimbetov, though, said he didn’t see the tenge dropping below 192 against the dollar in the next 6 months.

The government has said that it wants its monetary policy to target inflation rather than a tenge-US dollar rate.

This bandwidth extension follows on from a gentle recalibration of the tenge. The Central Bank has allowed it to lose a couple of percentage points in value against the US dollar this year. In February 2014, the Kazakh Central Bank devalued overnight by 20%.

Azerbaijan’s Central Bank cuts interest rates

JULY 10 2015 (The Conway Bulletin) – Azerbaijan’s Central Bank cut its key interest rate by 50 basis points to 3% to give its non-oil sector a boost.

Like other countries in the region, Azerbaijan has been trying to cope with an economic downturn triggered by a fall in Russia’s economy and a drop in the price of oil.

The Central Bank said Azerbaijan’s economy had stabilised since it devalued its manat currency by a third in February.

“The Azerbaijani economy remains resilient amid recent processes in the global economy and in the region continuing its stable growth,” the Azerbaijani Central Bank said in a statement.

“The monetary policy can be further eased given the acceptable level of inflation and dynamics of money supply.”

The cut in interest rates, though, is likely to put more pressure on the manat currency. This was momentarily relieved by the devaluation. Since then, data from the Central Bank has shown it has continued to spend heavily propping up its currency, although there was a rebound over the past few months which may have prompted the interest rate cut. Azerbaijan’s foreign currency reserves now measure $8.5b compared to 13.7b at the end of 2014.

Azerbaijan’s economy is skewed towards oil and gas.

ENDS

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

Tajik aluminium exports rise

JULY 14 2015 (The Conway Bulletin) – TALCO, the aluminium smelter in Tajikistan, exported 3.6% more aluminium in the first half of 2015 compared to the same period in 2014, the statistics agency said. TALCO is one of the biggest aluminium smelters in the world and generates around 70% of Tajikistan’s foreign currency earnings.

ENDS

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

Kazakhs issue sovereign debt

JULY 14 2015 (The Conway Bulletin) – In a move designed to plug a gap in it finances, Kazakhstan issued a $4b bond in two tranches.

These 10 and 30 year eurobonds with an initial yield of 3% and 3.5% over their US Treasuries equivalents were the second debt issued by Kazakhstan since October 2014, highlighting just how heavily a drop in oil prices had hit its budget.

And bond traders said that the yield, a measure of the risk factor attached to taking on the debt, had been relatively high.

“Remarkably, the placement yields are even higher than Russian sovereign bond yields,” Reuters quoted Alexey Bulgakov, a senior credit analyst at Sberbank, as saying.

Kazakhstan had not been active in the sovereign debt market since 2000, so two issues in the past nine months show how badly Kazakhstan needs the cash.

ENDS

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

Kazakhstan’s GDP growth slows

JULY 10 2015 (The Conway Bulletin) – Kazakhstan’s GDP grew 1.7% in the first half of this year, the statistics agency said. This is within estimates but is less than half the growth during the same period in 2014. Low oil prices and a drop in the value of the rouble have hit Kazakhstan.

ENDS

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

Georgia’s PPI jumps up, again

JULY 15 2015 (The Conway Bulletin) – Georgia’s Producer Price Index (PPI) measured 10.2% higher in June compared to a year earlier, Geostat reported, signalling creeping inflation. Geostat said manufacturing prices had pushed up. Georgian officials have been warning of inflation linked to the devaluation of the lari.

ENDS

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

Kyrgyz-Russia trade falls

JULY 14 2015 (The Conway Bulletin) – Trade turnover between Kyrgyzstan and Russia fell by 17.3% in January-May 2015 as compared to the same period in 2014, according to the Russian Customs Service. This is more evidence of the knock on effect on Central Asia of Russia’s economic downturn.

ENDS

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

Armenia looks to Iran for economic boost

YEREVAN, JULY 15 2015 (The Conway Bulletin) — Armenia welcomed the announcement from Vienna, perhaps with even more gusto than its neighbours, that Western powers had agreed a deal with Iran that should see sanctions on it lifted.

As a landlocked country surrounded mainly by enemies, Armenia has viewed its southern neighbour as a necessary trade partner over the past few years. A sanction-free Iran, it is hoped in Yerevan, will also give Armenia a boost.

“Naturally, if we consider Armenia and Iran as not only neighbours with friendly relations but also having partnership relations, then the lifting of sanctions against Iran and growing regional role of Iran will benefit us in terms of Iran’s developing economic relations,” said Armenian orientalist Vardan Voskanyan on Shant TV.

Both countries have been forced to improve bilateral relations — both diplomatic and trade — over the past few years. Iran has experienced years in the international wilderness. Armenia’s neighbours include Turkey and Azerbaijan, its enemies.

Armenia supplies electricity to Iran in return for gas and there is a programme to build a joint hydro-electricity generating plant along the border on the Arax River.

Various other projects are planned, including a railway.

The Zhamanak newspaper wrote that Armenia can now become a transit country for Iranian goods heading to Europe.

“We just have to welcome the achievement of the agreement, hoping that the positive effects of this situation will impact us as soon as possible,” it said.

ENDS

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

Iran deal to give region an economic boost

JULY 16 2015 (The Conway Bulletin) – Governments across Central Asia and the South Caucasus welcomed a deal between the West and Iran over its nuclear programme that will allow sanctions on Tehran to be lifted, boosting their southern neighbour as an important trade partner once again.

Sanctions have weighed down Iran’s economy since 2002, stunting demand and undercutting its value to the region.

Central Asian and South Caucasus countries have legally been able to trade with Iran during the Western-imposed sanctions, but Iran’s economy had faltered. They now hope that, unshackled, Iran can generate wealth and demand throughout the region once again.

“It will have a positive impact on the economic and social development of all countries in the region, and will further strengthen the cooperation between Kazakhstan and Iran,” Kazakh foreign minister Erlan Idrissov said of the deal with Iran.

From Dushanbe to Yerevan, these sentiments were echoed across the region.

Georgia’s foreign ministry said in a statement: “(This) deal brings about normalisation of relations between Iran and Western countries, which will create new economic opportunities for countries both in the region and in the entire world.”

Iran has, over the past few years, been increasing links with both Central Asia and the South Caucasus.

In Azerbaijan it patched up a row over spying, in Georgia new regulations have allowed Iranians to set up businesses and Armenia has been busy making plans to increase trade with one of its few regional allies.

Its a similar story in Central Asia where ties with Iran are being improved and strengthened through new train links and product swaps.

And Iran’s economic impact on the region is significant. The ArcelorMittal steel factory at Temirtau in central Kazakhstan, for example, has long complained that sanctions on Iran severely dented demand for its steel.

With sanctions soon to be lifted and Iranian domestic and industrial demand primed to rise, Central Asia and the South Caucasus should benefit.

ENDS

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