Tag Archives: economy

Moodys upgrades Kazakhstan’s econ outlook

JULY 26 2017 (The Bulletin) — Moodys, the rating agency, upgraded Kazakhstan’s sovereign rating to ‘stable’ from ‘negative’, an important indicator that analysts consider the Kazakh economy to be improving after a downturn. It cited government spending and exchange rate flexibility as well as pledged support for the banking sector as the main reasons for its improved economic outlook.

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(News report from Issue No. 336, published on Aug. 5 2017)

Kazakh CB blames rouble for tenge fall

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AUG. 2 2017 (The Bulletin) — Kazakhstan’s Central Bank said that speculation over the Russian rouble had forced a depreciation of the tenge. By the end of trading on Aug. 4, the tenge was trading at 332.91/$1, down from around 310/$1 at the end of May. Kazakhs have openly started to worry about a repeat of the devaluation of 2015 that wiped 50% off the value of the currency.

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(News report from Issue No. 336, published on Aug. 5 2017)

Azerbaijan’s CB keeps interest rates steady

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AUG. 1 2017 (The Bulletin) — Azerbaijan’s Central Bank kept its key interest rate at 15% saying that it had seen some improvements in key economic indicators over the past few months. Specifically, it said that growth in the non-oil sector had been 5.4% in the first half of the year, 3.7% increase in trade volumes and 2.2% increase in agriculture. The Central Bank said, though, that inflation remained a concern.

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(News report from Issue No. 336, published on Aug. 5 2017)

Kazakh economy improving says mobile operator Kcell

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ALMATY, JULY 20 2017 (The Bulletin) — Macroeconomic conditions in Kazakhstan are improving, Kcell, the Kazakh mobile operator part-owned by Swedish-Finnish Telia, said in its first half report, an important view of Central Asia’s biggest economy.

Kcell’s revenue from sales was down by 1.1% in the first half of the year compared to the same period in 2016 at 71.54b tenge ($219.5m) but this was due to changes in tariffs and the tough market conditions in mobile operations.

More importantly, Kcell CEO Arti Ots said, the economy was starting to show sustained growth after three years of stagnation.

“In the first half of 2017, we saw continued improving trends in both macroeconomic indicators and the market environment in Kazakhstan,” he said. “In the domestic telecoms market, as previously reported, ongoing tariff adjustments are starting to give a positive impact, which we expect to see the results of in the second half of the year.”

Kcell reports are watched carefully by analysts as they are considered to give a balanced corporate view of Kazakhstan’s economy. Like the rest of the region Kazakhstan has been trying to shake off a tough three years linked to a collapse in oil prices and a recession in Russia.

Economists have also said the outlook for Kazakhstan has improved this year. The Kazakh Central Bank has said inflation is easing and the World Bank has estimated that GDP will grow at around 2.2% this year, compared to 1% in 2015 and 2016.

Kcell is fighting a 9b tenge fine for late payment of taxes in 2012-15 handed out this year by the Kazakh authorities, which it says is unfair. It said in its H1 report that it didn’t expect to have to pay the full fine. Telia is looking to sell its stakes, owned directly and indirectly, in Kcell after a corruption row focused on its operations in Uzbekistan tarnished its reputation.

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(News report from Issue No. 337, published on July 27 2017)

Currencies: Uzbekistan’s soum

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JULY 27 2017 (The Bulletin) — So, it looks like we already have the big currency story of the year for the region. At least, that is, unless something goes terribly wrong with some of the more wobbly currencies out there – mentioning no names – Azerbaijan, Turkmenistan and even Kazakhstan.

The IMF returned from a mission to Tashkent saying that the government there was fully intending to relax currency exchange regulations that have strangled foreign investment. The official rate of the Uzbek soum is now just over 4,000/$1. The unofficial rate is more than double. How they merge is going to be the story to watch.

In the meantime, if anybody has missed it, it is clear that the Uzbek Central Bank has been managing a steady devaluation of its currency. The chart below shows the steps it has been making to devalue it – by more than 25% since the end of January.

On the equities front, KAZ Minerals continues to outperform, mainly because of another surge in copper prices.

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(News report from Issue No. 337, published on July 27 2017)

Uzbekistan promises to reform its currency exchange

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TASHKENT, JULY 24 2017 (The Bulletin) — Uzbekistan plans to power ahead with reform of its currency exchange, the IMF said after a mission to Tashkent.

The Uzbek Central Bank has steadily cut the value of its soum currency, allowing it to devalue by around 25% this year, but there are still restrictions on trading it. Tearing up these restrictions would underscore the credentials of Shavkat Mirziyoyev, president since September last year, as a reforming leader.

In a statement, the IMF said: “The mission especially welcomed the authorities’ plan to frontload reforms of the foreign exchange system. Unifying exchange rates and allowing a market-based allocation of foreign exchange resources would allow the Central Bank of Uzbekistan to pivot to a stability-oriented monetary policy capable of effectively controlling inflation.”

The reference to inflation is important as the Uzbek Central Bank said earlier this year that it was having to raise its key interest rate to combat rising prices. Like the rest of the region, a collapse in oil prices and a recession in Russia have hit the economy of Uzbekistan.

Operating in Uzbekistan has always been problematic for foreign investors. There are two different exchange rates in the country. The official one set by the Central Bank, and the unofficial Black Market rate. A Bulletin correspondent said the Black Market rate for the Uzbek soum was 8,450/$1, compared to just over 4,000/$1 on the official market.

The IMF also said restructuring state-owned companies and banks and improving economic data were vital.

“The authorities’ decision to adopt a new CPI to measure inflation, starting in 2018, should already help improve the quality of a key statistical indicator,” the IMF said.

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(News report from Issue No. 337, published on July 27 2017)

Kazakhstan’s GDP rises

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JULY 23 2017 (The Bulletin) — Spurred on by an increase in mining and metals output, Kazakhstan’s economy grew by 4.1% in the first half of the year compared to the same period in 2016, economy minister Timur Suleimenov said. The Kazakh government has been desperate to present a rising GDP number after three years of stagnation following a collapse in oil prices in 2014 and a recession in Russia.

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(News report from Issue No. 337, published on July 27 2017)

Russian tourists flock to Georgian breakaway region of Abkhazia

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SUKHUMI/Georgia, JULY 16 2017 (The Bulletin) — Russian tourists are flocking to beach resorts in Abkhazia at a greater rate than ever before, giving the breakaway Georgian region an economic boost.

Russian couples walk along Sukhumi’s beachfront promenade and sip Abkhaz wine in newly renovated restaurants. Russian is the main language heard on the streets, shops are filled with Russian products and Russian newspapers are available in local newsagents. The currency used is the Russian rouble.

Abkhazia looks, feels and sounds like a piece of Russia and local residents are, mainly, grateful.

A tourist guide in Novy Afon, around 20km north of Sukhumi told the Bulletin : “Thank God there are the Russians. Not only did they save us when the Georgians wanted to exterminate us but now they make our economy run through tourism.”

It declared independence from Georgia in 1992, triggering a war that killed and displaced thousands of people and lead to a de facto independence. In 2008 after a war with Georgia focused on its two rebel states of Abkhazia and South Ossetia, Russia recognised them as independent. Only a handful of other countries looking to curry Russian favours followed.

Moscow subsidises Abkhazia’s state budget and has thousands of troops permanently deployed in the region.

Other than the military and the breakaway region’s administration, bankrolled by the Kremlin, there are few other jobs in Abkhazia, making Russian tourists so important.

And they are coming in their thousands, all via a border crossing with Russia to the north. Last year Avtandil Gartskiya, the tourism minister told the New York Times in an interview that he expected 1.5m tourists per year, up from less than 100,000 a decade ago.

By contrast, references to Georgia have been eradicated, or nearly.

The cuisine gives away Abkhazia’s Georgian connection. Georgia’s food icon, the Ajarian Khachapuri, a boat shaped crusty bread filled with melted cheese and egg, is a firm favourite with the Russian tourists. It’s been subjected to a rebrand, though, and is called ‘lodochka s yaizom’. In English, this simply means ‘boat with egg’.

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(News report from Issue No. 336, published on July 16 2017)

Currencies: Kazakhstan’s tenge

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JULY 16 2017 (The Bulletin) — The Kazakh tenge has now fallen to its lowest level since January, giving up most gains it had made this year.

By July 14 it was trading at $327.91/$1, down 2.3% since July 3. At its year peak on May 25, the tenge had traded at 310.65/$1. This means that it has fallen by 5.5% in around seven weeks.

A fluctuating oil price is likely to have had little impact on the value of the tenge. It has been hovering between $50 and $45 per barrel for some time. Instead, commentators have pointed to weak Kazakh fundamentals which suggest that the economy is still in poor shape.

Most worryingly amongst this economic data is the bad debt ratio that banks have built up. It just seems to be getting bigger and the government is preparing a bailout.

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(News report from Issue No. 336, published on July 16 2017)

State salaries and pensions to rise by 10% in Turkmenistan

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JULY 8 2017 (The Bulletin) — Apparently looking to bolster his support from ordinary Turkmen during a sustained economic downturn, President Kurbanguly Berdymukhamedov ordered state pensions and salaries to be increased from Jan. 1 2018. Analysts have said that the Turkmen economy is under increasing pressure and that inflation is rising fast.

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(News report from Issue No. 336, published on July 16 2017)