MARCH 8 2016 (The Conway Bulletin) – The World Bank predicted that Armenia’s economy would grow at 2.5% this year, it’s lowest rate for five years. Last year, the World Bank said that Armenia’s economy grew by 3%. It said that the main problems facing Armenia were a recession in Russia and structural weaknesses in its own economy.
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(News report from Issue No. 271, published on March 11 2016)
MARCH 7 2016 (The Conway Bulletin) – Imports of Georgian wine to Russia more than doubled in the first two months of the years compared to the same period in 2015, Georgia’s national wine agency reported. Wine is both an important export for Georgia and also an important cultural identifier. Russia recently lifted a ban on the import of Georgian wine.
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(News report from Issue No. 271, published on March 11 2016)
MARCH 6 2016 (The Conway Bulletin) – Russia gave Kyrgyzstan a $30m grant to help it cover holes in its finances that have appeared during the economic downturn. Specifically the grant was supposedly earmarked to finished building new accommodation for police and army recruits. The economic downturn has hit Kyrgyzstan hard, whipping millions off is budget. Russia curries favour with Central Asian states by handing out grants or cheap loans.
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(News report from Issue No. 271, published on March 11 2016)
MARCH 11 2016, RUSTAVI, Georgia (The Conway Bulletin) — The growing economic malaise is starting to bite in Georgia. Just ask 51-year-old Manana who works at the Azot chemical plant in Rustavi, an industrial town around 25km from Tbilisi.
The factory, which employs 2,000 people, is faced with closure within a month unless it can secure a reduction in the price it pays for gas.
“I don’t know what I would do, if they really close for good,” she said. Her face wrinkled, she sighed and then turned towards the entrance of the Soviet-built factory. Today she would work but she wasn’t sure what the future held.
This is a story playing out across Georgia, where industrial unrest is growing as the lari currency drops in value and inflation starts to rise. Like the rest of the region, vital remittances from abroad, mainly Russia, have fallen and frustration is growing with the government.
Factories and mines are reporting worker unrest and bosses are warning of closures and redundancies.
Revaz Karanadze is an activist with the Tbilisi Solidarity Network, a grassroots organisation supporting regional labour protests. She said falling global oil prices had undermined the economy.
“The economic situation in the region, and especially oil-producing neighbour Azerbaijan, hits the factory and mining,” she said.
The Azot chemical plant produces fertilisers, as well as ammonia, sodium cyanide, nitric acid and liquid oxygen. It uses more than 300m cubic meters of gas per year, the highest consumption in Georgia. Two-thirds of its costs are gas.
The problem is that it negotiated an 8 year price deal for gas in 2011 when oil prices, which drive gas prices, were around $115/barrel. They are now around a third of that price.
Georgian ministers and SOCAR, the Azerbaijani state-owned company that supplies the gas, have said that a deal is in sight but Manana, the factory worker, was less optimistic.
“They always say it’ll get better, but we are not the only ones struggling. Who knows what tomorrow will bring,” she said.
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(News report from Issue No. 271, published on March 11 2016)
MARCH 5 2016 (The Conway Bulletin) – Over the past few weeks Turkmen President Kurbanguly Berdymukhamedov has sacked and reprimanded several government officials accusing them of corruption and providing fake data, a shake up that may betray his frustration with slowing economic and social projects.
The latest officials to feel Mr Berdymukhamedov’s wrath were Akmyrat Mamedov, head of the country’s Statistics Committee, and Batyr Halliyev, the meteorological service. They were both sacked for “short- comings at work”.
And apparently signalling that more sackings were likely, Mr Berdymukhamedov said the government was not immune from corruption. He cited the case of former deputy PM, Baimurat Khodzhamukhamedov, who was found guilty last year of taking bribes of $1.5m.
He went on to harshly criticise the head of the State Commodity and Raw Materials Exchange, a local market for commodities.
Just days earlier, Mr Berdymukhamedov had reshuffled government officials in the National Security Service and the Border Service.
In countries as reclusive as Turkmenistan, government appointments give an insight on the political equilibrium within the country.
Mr Berdymukhamedov is known for publicly shaming officials for incompetence and strongly advocating against corruption. Opposition activists abroad, though, say that these charges are generally fabricated to crack down on dissenting or inefficient bureaucrats.
A regional economic crisis has hit government budgets across the region. Although reclusive and not given to releasing anything other than the most positive economic data, information leaking out of Turkmenistan suggests that this downturn has hit it hard too. Currency controls and a deferment of government salaries have all been muted.
The mass sackings is another signifier that all is not well at Mr Berdymukhamedov’s court.
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(News report from Issue No. 271, published on March 11 2016)
MARCH 11 2016 (The Conway Bulletin) – Foreign direct investment (FDI) into Georgia measured $1.35b in 2015, a drop of around 23% from 2014. FDI is an important part of Georgia’s economy. It is, generally, volatile but the sharp fall may be indicative of an overall slump in economic conditions in the region.
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(News report from Issue No. 271, published on March 11 2016)
MARCH 9 2016 (The Conway Bulletin) – Georgia’s Central Bank kept interest rates steady at 8%, saying that inflation was due to slow and dip into its target zone. Like the rest of the region, Georgia has been increasingly worried about inflation pressure building up in its economy. Prices and salaries have been rising as the value of the lari has fallen. Overall inflation in February was 5.6%.
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Copyright ©The Conway Bulletin — all rights reserved
(News report from Issue No. 271, published on March 11 2016)
MARCH 11 2016 (The Conway Bulletin) – Kazakhstan is AvtoVAZ’s largest export market but a duty introduced at the start of the year by the Kazakh government to support its car making industry, has, apparently, destroyed it.
The number of AvtoVAZ cars delivered to the country jumped in 2015 due to the tenge-rouble currency imbalance for the first part of the year.
From the end of 2014 the rouble started collapsing, but the Kazakh Central Bank stubbornly kept the tenge at 185/$1.
This made imports very cheap, undermining Kazakhstan’s own carmaking industry but boosting AvtoVAZ.
In the first half of 2015, car sales were down by one-third. For the year, sales were down 40% to 97,446 units, the lowest level since 2012.
Even President Nursultan Nazarbayev weighed in and said that it was wrong for Kazakhs to buy cheaper products abroad and push the domestic industry out of the competition.
The Kazakh government also looked into subsidising the local automotive sector and impose import duties — an issue that must surely have raised concerns for both the World Trade Organisation and the Eurasian Economic Union.
The new $2,000 car import tax has also had an almost immediate effect. It has made imports unsustainable. It has simply priced them out of the market, denting consumer choice and, also, Kazakh- Russian relations.
Kazakhstan and Russia are supposed to be allies. The Eurasian Economic Union, a Kremlin project, was supposed to protect the area from interventionist duties. Where was it when Kazakhstan said it was going to impose its $2,000 import levy on car imports.
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(News report from Issue No. 271, published on March 11 2016)
MARCH 4 2016 (The Conway Bulletin) – Azerbaijan’s Central Bank raised its key interest rate to 7% from 5% to support its manat currency, the second interest rate increase in less than a month. It increased rates on Feb. 15 to 5% from 3%. The manat currency has lost 50% of its value in the past year. This is the highest rate since 2009.
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(News report from Issue No. 271, published on March 11 2016)
MARCH 9 2016, ALMATY (The Conway Bulletin) — Non-performing loans, a major signifier of the banking sector’s economic health, have started to rise again in most large Kazakh banks, data showed.
Other than Kazkommertsbank, which wrote-off swathes of non-performing loans last year after it merged with debt-ridden BTA Bank, only Halyk Bank of the big lenders improved its loan portfolio in 2015.
Halyk Bank is owned by business- man Timur Kulibayev and his wife Dinara Nazarbayeva, daughter of Kazakh Pres. Nursultan Nazarbayev. Tsensabank, Bank Centre Credit and the Kazakh subsidiary of Russia’s Sberbank all saw the ratio of non- performing loans in their portfolios worsen.
Kazakhstan is sensitive to the proportion of non-performing loans held by its banks because after the 2008/9 Financial Crisis it was considered to have one of the worst ratios of bad to good loans in the world.
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Copyright ©The Conway Bulletin — all rights reserved
(News report from Issue No. 271, published on March 11 2016)