JUNE 6 2016 (The Conway Bulletin) — Russian PM Dmitri Medvedev said that state-owned gas company Gazprom will invest around $1.5b in Kyrgyzstan’s energy infrastructure and that it will cancel export duty on oil and oil products. Mr Medvedev made the statement while in Bishkek on an official visit. Oil and petroleum products make up 51.9% of Kyrgyz imports from Russia.
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(News report from Issue No. 284, published on June 10 2016)
ALMATY, JUNE 10 2016 (The Conway Bulletin) — Currencies across the Central Asia and South Caucasus region have stabilised this year after losing 30% to 50% of their value in 2015 thanks, in part, to record high interest rates but governments are now having to deal with deflation.
As well as raising interest rates to their highest level since the Global Economic Crisis of 2008/9, Central Banks bought heavily to defend their currencies. The Kazakh Central Bank said it bought $3.7b in Jan.-May 2016 and in Georgia, the Central Bank intervened twelve times in just two months, although on a smaller scale.
And both Central Banks have now started unwinding high interest rates, hoping to spark economic activity.
Earlier this year the Kazakh Central Bank cut its key interest rate to 15% from 17%. Georgia’s Central Bank cut its interest rate to 7.5% from 8% and promised further cuts. New data from Georgia’s statistics agency highlighted the challenge. It said that prices in May dropped by 0.4%, the third consecutive month of falling prices. Year-on-year inflation in May measured 2.1%, down from a high of 6.3% in November.
And this scenario is playing out across the region.
Last month Armenia’s Central Bank said that year-on-year inflation measured minus 1.9% and immediately cut interest rates by 0.5% to 7.75%.
But Alex Nice, an analyst at the Economist Intelligence Unit, said that the region’s weak banking systems and high levels of dollarisation means that there is little Central Banks can do to impact economic activity.
“The exchange rate is a more powerful lever for managing prices in the economy [than the official interest rate],” he said.
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(News report from Issue No. 284, published on June 10 2016)
JUNE 8 2016 (The Conway Bulletin) — PM Giorgi Kvirikashvili said income earned from the tourist industry reached $1.94b last year, 8.3% more than in 2014. According to Mr Kvirikashvili, the number of incoming tourists increased by 14% in the first five months of the year, compared to 2015. This is important for Georgia, where tourism is a major part of its economy.
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(News report from Issue No. 284, published on June 10 2016)
JUNE 9 2016 (The Conway Bulletin) — Foreign direct investment into Georgia in Q1 2016 measured $376m, roughly double the total of Q1 2015, the country’s statistics agency said. The communication and transport sector received the largest proportion of investments. The data suggests that Georgia’s economy is rebounding from a steep economic downturn last year that was triggered by a recession in Russia and a drop in oil prices.
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(News report from Issue No. 284, published on June 10 2016)
JUNE 1 2016 (The Conway Bulletin) — Azerbaijan’s state-owned Southern Gas Corridor company said it will issue a second $1b Eurobond by the end of 2016 or early next year, Bloomberg reported. The Southern Gas Corridor, which is in charge of a pipeline network that will connect Azerbaijan’s gas fields with European consumers by 2019, issued a $1b Eurobond in March. Sustained low oil prices have hit the financial feasibility of several large infrastructure projects across the region.
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(News report from Issue No. 283, published on June 3 2016)
JUNE 1 2016 (The Conway Bulletin) — Azerbaijan’s GDP will shrink by 2.4% in 2016, the IMF said in a statement after it sent a mission to Baku. The IMF improved its forecast, which had previously said that Azerbaijan’s GDP would fall by 3% this year. Sustained low oil prices have hit Azerbaijan’s growth. The IMF has urged structural reforms to accelerate the country’s diversification objectives but the Azerbaijani economy has remained stubbornly addicted to oil.
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(News report from Issue No. 283, published on June 3 2016)
MAY 30 2016 (The Conway Bulletin) — Kazakhstan’s Central Bank said tenge-denominated deposits had grown steadily in Q1 2016, due to the stabilisation of the exchange rate with the US-dollar after five months of high volatility. Commercial banks increased interest rates on deposits in an effort to attract customers. The C.Bank’s decision to lower interest rates earlier in May could now depress deposits and increase spending.
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(News report from Issue No. 283, published on June 3 2016)
JUNE 1 2016 (The Conway Bulletin) — Kazakh President Nursultan Nazarbayev lifted a ban on the import of potatoes from Kyrgyzstan after meeting with his Kyrgyz counterpart Almazbek Atambayev in Astana. Kazakh authorities had banned Kyrgyz potatoes in early May due to an outbreak of Globod- era rostochiensis, a pest. The Kazakh regulatory agency said it will continue to monitor the presence of the pest in the following months.
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(News report from Issue No. 283, published on June 3 2016)
MAY 30 2016 (The Conway Bulletin) — Kyrgyzstan’s Central Bank cut interest rates late by two percentage points to 6% because it said that inflation had significantly slowed, local media reported. Annualised inflation measured 0.2% at the end of April, an indication that economic activity has slowed in Kyrgyzstan. The Central Bank has also kept the som-US dollar exchange rate below 70/1 for two months.
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(News report from Issue No. 283, published on June 3 2016)
JUNE 1 2016 (The Conway Bulletin) — The minimum subsistence level in Kazakhstan increased by 0.5% in May, indicating that inflation and slower economic growth have hit people’s livelihoods. The Statistics Committee said Kazakhs need a minimum of 20,630 tenge ($61) to survive. This is 8.5% higher than in May last year but is still slower than annualised inflation of 16.7%.
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(News report from Issue No. 283, published on June 3 2016)