Tag Archives: economy

Turkmen President wants faster import substitution programme

JULY 12 2017 (The Bulletin) — At a government meeting focused on the economy, Turkmen president Kurbanguly Berdymukhamedov told his ministers to speed up the diversification of the economy and especially an import substitution programme that it has been working on. The media report of the meeting betrays, perhaps, Mr Berdymukhamedov’s nervousness at the state of the Turkmen economy. It has been hit by a regional economic decline.

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

Turkmen President sacks finance minister

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JULY 11 2017 (The Bulletin) — Turkmen president Kurbanguly Berdymukhamedov sacked Mukhametguly Muhammadov as finance minister in yet another public dressing down for a senior government official. Mr Berdymukhamedov has sacked almost his entire government over the past year in what analysts have said is an attempt to deflect blame for Turkmenistan’s stuttering economy.

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

Foreign investment climate in Georgia is worsening says business group

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TBILISI, JULY 3 2017 (The Bulletin) — The foreign investment climate in Georgia is deteriorating at a rapid rate because of the unscrupulous use of the courts, the influential Georgia International Chamber of Commerce (GICC) said in a statement after its AGM.

The GICC was careful to say that it thought that Georgia’s government was a positive influence on the business climate but that there were other forces and influences that were dragging it down.

“On the other hand (there is) a negative and destructive power represented by ‘uncontrolled elements’ from both in and out of state structures who do not report to the Head of Government and on whom government has no control,” it said in a statement.

Specifically, the IGCC said that unscrupulous officials, police and other officials “scam foreign businesses, expropriate them, steal their lands and their businesses.”

The criticism is a rare blow to Georgia’s reputation as a place to do business. It is more usually associated with positive criticism, relative to the rest of the region. The Georgian government has not responded.

Direct foreign investment is a vital inflow of cash for the Georgian economy. FDI measured $1.65b in 2016, double the inflow of 2010 but down on 2007 when inflows measured over $2b. A war with Russia in 2008 dented Georgia’s FDI pull.

The IGCC referenced fines handed out by a Tbilisi city court against Philip Morris, the US cigarette maker, and British American Tobacco this year as bias against foreign companies.

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

Uzbekistan allows currency liberalisation

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JULY 7 2017 (The Bulletin) — Uzbekistan has allowed a handful of banks to trade its soum currency at its market rate, Reuters quoted two officials as saying, part of a plan promoted since the death last year of Islam Karimov to liberalise its currency. Currently, investors have to buy soum at an official rate of around 4,000/$1 compared to an unofficial rate of around 8,500/$1. Foreign investors have said that Uzbekistan’s dual currency scheme is a major drawback for its investment climate.

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

Armenia’s CB keeps interest rates steady

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JUNE 27 2017 (The Bulletin) — Armenia’s Central Bank kept its key interest rate unchanged at 6%, holding true to is assessment earlier this year that it would stop its easing cycle to ward off a potential jump in inflation. Armenia had been measuring deflation until the start of this year when it said that the economy had turned a corner and that prices were now rising. It had steadily slashed its interest rate from 10.5% in 2015 to 6% in February 2017.

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(News report from Issue No. 335, published on July 3 2017)

Unemployment rate rises in Armenia

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JUNE 30 2017 (The Bulletin) — Armenia’s unemployment rate hit 19% in the first quarter of the year, highlighting the impact of an economic downturn. The unemployment rate has risen steadily since 2014. In 2013/14 it hovered between 15% and 16%. Like the rest of the region, Armenia’s economy has been hit by a drop in oil prices that has dragged down the Russian economy.

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(News report from Issue No. 335, published on July 3 2017)

Uzbekistan to rise utility prices

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JUNE 30 2017 (The Bulletin) — Uzbekistan will raise the cost of electricity and gas it supplies to households by 7% from July 15, media reported quoting the state- owned Uzbekenergo and Uzbekneftegas. This is the second utility price rise in less than a year, the uzdaily.uz website reported. The price rise shows the inflationary pressure built into the Uzbek economy. Last month the Uzbek Central Bank increased its key interest rate to try to dampen inflation.

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(News report from Issue No. 335, published on July 3 2017)

GDP grows in Georgia

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JUNE 28 2017 (The Bulletin) — Government spending on infrastructure projects and private sector development have given the Georgian economy a boost and means that it could surpass expectations of GDP growth of 4% this year, economy minister Giorgi Gakharia said in an interview with Reuters. This is important because of all the economies of Central Asia and the South Caucasus, Georgia’s appears to be recovering the fastest from a downturn triggered by a drop in oil prices that hit Russia, the regional economic driver.

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(News report from Issue No. 335, published on July 3 2017)

Tajik CB auctions failed banks property

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DUSHANBE, JUNE 29 2017 (The Bulletin) — Tajikistan’s Central Bank said that it would auction off property belonging to two failed banks Tochprombonk and Fononbonk, a very public humbling for two prominent Tajik financial institutions.

The government withdrew the banking licences for Tochprombonk and Fononbonk on Feb. 24, effectively declaring them bankrupt, having tried to rescue them last year in a $490m bailout of the banking sector. It was more successful propping up Tajikistan’s two main banks, Tojiksodirotbonk and Agroinvestbank, which appear to have survived an economic downturn.

Tajikistan, like the rest of Central Asia, has been grappling with the impact of a collapse in oil prices that triggered a recession in Russia. Russia is the main driver of economic activity in the region and its recession had a heavy knock-on effect in Central Asia, which, to a large extent is reliant on remittances sent back by migrants working in Russia.

The Tajik banking sector has been heavily criticised by international organisations for is weaknesses. In April the Asian Development Bank (ADB) said that the Tajik banking sector needed to improve is transparency and increase capital levels. Last year the IMF said that the banking sector in Tajikistan was “dire”. Bad loans were now over 50% of the total loan portfolio.

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(News report from Issue No. 335, published on July 3 2017)

Business looks good for Kazakhstan’s discount voucher market

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ALMATY, JUNE 26 2017 (The Bulletin) — Chocolife.me, the Kazakh discount voucher company modelled on the US’ Groupon, has bought its rival BeSmart for an undisclosed amount, its CEO, Ramil Mukhoryapov, told The Bulletin in an interview.

In the interview, Mr Mukhoryapov gave an upbeat assessment of the discount market in Kazakhstan, saying that the economic downturn of the past three years had, in some ways, driven growth.

“We feel that the additional trigger was the devaluation. People became a bit poorer and they had more stimulus to save (money through discount vouchers),” he said.

In 2015, the Kazakh tenge lost around 50% of its value. Central Asia and the South Caucasus have been dealing with a sudden drop in the value of oil and gas from 2014 which knocked revenues and triggered a recession in Russia, the region’s economic driver.

Mr Mukhoryapov said, though, that although the collapse of the tenge had hit the US dollar valuation of Chocolife.me, the market had been growing by 25% to 30% a year.

Chocolife.me, and BeSmart, vouchers typically offer discounts on family days out at water parks and funfairs, as well as dental polishing services and manicures.

Combined, the two brands will have a near 100% share of the discount voucher market in Kazakhstan, Mr Mukhoryapov said. He declined to say how much the market was currently worth or how much Chocolife.me, set up in 2011, had paid for BeSmart but he did emphase the role that the business played in the Kazakh economy.

“The market of collective purchases is a very small part of the advertisement market. If we look, what we do is we help advertise, promote (services),” he said.

For analysts, deals in the Kazakh retail market suggest that consumer confidence in Kazakhstan may, just, be beginning to improve.

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(News report from Issue No. 335, published on July 3 2017)