FEB. 23 2017 (The Conway Bulletin) — Textile production in Kyrgyzstan was 27% lower in January compared to the same period a year earlier, media reported quoting official statistics. This is important as it shows the impact of a downturn in the economy. Textile production, outside mining, is one of Kyrgyzstan’s main earners.
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(News report from Issue No. 318, published on Feb.24 2017)
DUSHANBE, FEB. 22 2017 (The Conway Bulletin) — Tajiks working in Russia sent $1.9b back to Tajikistan in 2016, representing around a third of the national GDP, Russian presidential aide Yuri Ushakov said quoting Central Bank statistics.
The data underlines the fall in the value of the remittances being sent back from Russia, where a drop in oil prices and Western sanctions imposed after Russian interference in eastern Ukraine, has hit the economy and pushed it into a recession.
“Over 870,000 Tajikistan citizens are working in Russia. The amount of their money transfers to the motherland was $1.9 bln in 2016, corresponding to one third of the republican GDP,” Tass news agency quoted Mr Ushakov as saying.
Remittances of $1.9b is around 15% lower than in 2015, which was itself nearly 50% lower than in 2014. The proportion of Tajikistan’s national economy that remittances makes up is also down sharply. Previously, remittances sent to Tajikistan from Russia accounted for around half of its GDP.
Tajikistan and Kyrgyzstan are often described as being the most remittance-dependent countries in the world.
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Copyright ©The Conway Bulletin — all rights reserved
(News report from Issue No. 318, published on Feb.24 2017)
FEB. 24 2017 (The Conway Bulletin) — The Kazakh tenge added another 1% on to its value this week, bolstered by a rise in oil prices, and the Georgian lari added 2%, a rise that analysts attributed to a general improvement in global economic sentiment.
It was a different story, though, across the South Caucasus, where the Azerbaijani manat lost another 0.8% to fall to 1.7925/$1. This is frustrating for the Central Bank as the manat had looked good to break 1.7445/$1, the level it reached at the start of February – its strongest since November.
In any case, the manat has recovered since the end of January when it bottomed out at 1.95/$1.
But the Chairman of Board of Directors of Financial Markets Supervision Authority, Rufat Aslanli, told media that the manat couldn’t rely on oil prices to pull it out of its negative spiral. “Oil price has impact on sustainability of our economy, but not on the exchange rate of dollar,” he said.
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Copyright ©The Conway Bulletin — all rights reserved
(News report from Issue No. 318, published on Feb.24 2017)
FEB. 20 2017 (The Conway Bulletin) — In an interview with Euronews, Kyrgyz president Almazbek Atambayev directly criticised his neighbour Kazakhstan for imposing what he described as an economic blockade in 2010. He was discussing why Kyrgyzstan joined the Kremlin-lead Eurasian Economic Union, a trade group that has grown unpopular in Kyrgyzstan. Kazakhstan responded to the accusation of an economic blockade by filing an official complaint. Relations between Kyrgyzstan and Kazakhstan have become fraught over trade rows.
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(News report from Issue No. 318, published on Feb.24 2017)
ALMATY, FEB. 20 2017 (The Conway Bulletin) — Kazakhstan’s Central Bank cut its key interest rate by one percentage point to 11%, its lowest level since it introduced its this key rate in September 2015, and delivered one of its most upbeat assessments of the economy for years.
Central Bank chief Daniyer Akishev said that improved global economic outlook, a rise in oil prices and a slowdown in inflation had allowed him to cut the rate. At the beginning of last year, Kazakhstan’s interest rate had measured 17%.
Both the rate cut and the renewed confidence in the economy will be a relief to investors and to ordinary Kazakhs who have had to deal with an avalanche of grim economic data since oil prices collapsed in mid-2014.
“We took into account the positive impact of external factors. Sustainable world oil prices above $50 per barrel, improving global eco- nomic prospects and moderate inflationary background in our trading partners,” Mr Akishev told journalists.
“Among internal factors there has been a significant slowdown in inflation, which creates lower inflationary and devaluation expectations amongst people, as well as the ongoing de-dollarisation of bank deposits.”
Inflation had been a major worry after the tenge devalued by 50% in 2015. It had started to rise fast last year but has since slowed and the Kazakh Central Bank said that it would ease to between 6.5% and 7% this year from 8.5% last year (Feb. 22). The Central Bank also said that inflation in 2018 could drop as low as 5%.
The Kazakh economy is the biggest in Central Asia and is an important driver of regional economic growth.
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(News report from Issue No. 318, published on Feb.24 2017)
ALMATY, FEB. 20 2017 (The Conway Bulletin) — Kazakhs are significantly less well off now because of the collapse of the tenge and price rises, the ranking.kz website reported, although the general feeling on streets of Almaty is one of cautious optimism that the worst of an economic downturn is over.
Ranking.kz said that on average, people’s purchasing power had dropped by 4.5% in 2016, the sharpest drop in the last 16 years. In 2009, during the Global Financial Crisis, ranking.kz said that people’s purchasing power dropped by 3.1%.
On the streets of Almaty, though, people appeared less concerned by their apparent drop in purchasing power. A Conway Bulletin correspondent said that economic sentiment had turned with the tenge finally strengthening against the US dollar, oil prices staying around $55/barrel and inflation slowing.
Iraina, 22, was hurrying along a frozen sidestreet clutching a bag of groceries.
“Honestly, no. Of course it was a noticeable increase in groceries prices but I do not restrain myself,” she said. “I have a good salary, whereas prices increased only by 20 to 30 tenge.”
For Bakyt Kasenovich, 68, even though there had been an obvious economic dip, life now was far better than it was in 1990s or 2000s.
“I would not say that our level of life decreased so much. We, most likely, just got used to a rise in prices. I would not say that Kazakhstan faces this heavy crisis now,” he said. “Anyway we live better than before.”
A survey by ACT, an FSU-focused research company, showed that in October 2016 84% of Kazakhs were generally upbeat about their personal finances. They also expected to have an even better financial scenario by April 2017.
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Copyright ©The Conway Bulletin — all rights reserved
(News report from Issue No. 318, published on Feb.24 2017)
FEB. 20 2017 (The Conway Bulletin) — Armenia’s economic activity index, considered a key barometer of the economy’s health, was 6.5% higher in January compared to a year earlier. A 12% rise in industrial production was the biggest driver of the economic boost. Importantly, though, agricultural output was largely flat.
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(News report from Issue No. 318, published on Feb.24 2017)
FEB. 13 2017 (The Conway Bulletin) — Kazakhstan handed out over 36,700 work permits to foreigners last year, data from the PM’s website showed, an increase from 32,000 in 2015. China dominates with 12,699 permits, down from 13,373 in 2015. The issue of Chinese labourers working on energy and infrastructure projects part-funded by China is sensitive as ordinary Kazakhs accuse them of taking their jobs and receiving preferential treatment. After China, Turkish citizen received the second largest number of work permits in 2016 with 3,502.
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Copyright ©The Conway Bulletin — all rights reserved
(News report from Issue No. 317, published on Feb.17 2017)
BISHKEK, FEB. 15 2017 (The Conway Bulletin) — In an interview with the Bloomberg news agency, Tolkunbek Abdygulov, head of the Kyrgyz Central Bank essentially told ordinary Kyrgyz that they should buy gold rather than keep their savings in the unpredictable Kyrgyz som.
Gold is considered a safe-haven for investors and savers whenever the global outlook is fragile but it holds added importance in Kyrgyzstan, which relies on the Kumtor gold mine to produce over a tenth of its GDP.
Like the rest of the region, an economic slowdown has hit the Kyrgyz economy, denting GDP growth and undermining the economy. The Kyrgyz som has slid from around 50/$1 to 69/$1.
Mr Abdygulov appeared to reference this som weakness in his interview with Bloomberg.
“Gold can be stored for a long time and, despite the price fluctuations on international markets, it doesn’t lose its value for the population as a means of savings,” he was quoted as saying.
Over the past couple of years, the Kyrgyz Central Bank has offered to sell gold in different sizes to ordinary Kyrgyz and to store it safely. Mr Abdygulov said that the Bank had sold around 140kg of gold through this system.
And the Central Bank appears to be leading by example. It has increased its purchases of gold while many other central banks have reduced theirs. Bloomberg data showed that Kyrgyzstan currently holds around $190m of gold in its reserves, four times the level of 10 years ago.
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Copyright ©The Conway Bulletin — all rights reserved
(News report from Issue No. 317, published on Feb.17 2017)
FEB. 17 2017 (The Conway Bulletin) — >> How dramatic has these interest rates cuts been?
>> Very. Like a downhill skier racing to the bottom of the run, Armenia’s Central Bank have been determined and dogged. In mid-2015, the interest rate had been 10.5%. Now it’s at 6%, its lowest ever level. In November and December 2015, the Central Bank slashed rates by 1.75% but otherwise it has been a steady path, generally knocking off a quarter of a percentage every month or so.
>> But why has the Armenian Central Bank been in such a hurry to cut rates?
>> Basically, deflation has become the main driver of Armenian economic policy in the past couple of years. Price rises started to slow down in mid-2015, a sign of the tough economic times triggered by the recession in Russia. Within 12 months, prices had tipped into deflation. Earlier this month, the Central Bank said that although food prices had started rising again, non-food items were still dropping in price.
>> And what about going forward? Has there been any forward-looking guidance from the Armenian Central Bank?
>> A bit. The Central Bank has said that prices will remain soft in 2017 because the domestic economy is still limping along. It said non-food items, gas and electricity prices had all fallen in price. By cutting rates, it is trying to stoke economic activity. The risk is that a fall in interest rates will weaken the dram. It is now valued at 486/$1, its lowest since March 2016 and about 20% weaker than it was in mid-2014.
>> Is it a similar story in Georgia and Azerbaijan, Armenia’s neighbours?
>> Not exactly. In Georgia there has been some deflationary pressure on prices but not to the extremes seen by Armenia. Its Central Bank had also cut interest rates but it has now reversed this trend and actually put up rates last month. It also said that inflation would start rising this year. In Azerbaijan, as reported in The Conway Bulletin last week, prices are rising and fast. The major problem there has been the collapse in the currency. Azerbaijan is far more reliant on oil prices than Armenia or Georgia and has seen its currency halve in value over the past couple of years. This drop in the value of the currency has pushed up inflation.
>> What can Armenia do to stop deflation?
>> The deflation is slowly curbing itself. Food prices are rising and non-food prices are not falling as fast. Armenia’s economy closely follows Russia. The Russian economy is improving as oil prices rise, helping Armenia to recover too.
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Copyright ©The Conway Bulletin — all rights reserved
(News report from Issue No. 317, published on Feb.17 2017)