OCT. 6 2015 (The Conway Bulletin) – The proportion of savings in Kazakhstan held in foreign currency measured 78% in August, according to the ranking.kz website, a sharp increase from a year earlier. Foreign currency deposits in August 2014 measured 60% of the total. Kazakh savers have gradually lost faith in their currency.
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(News report from Issue No. 251, published on Oct. 9 2015)
OCT. 2 2015 (The Conway Bulletin) – Annualised inflation in Georgia in September measured 5.2%, the Georgia statistics service said, a small drop from August. The main driver of inflation has been a rise in the price of electricity, alcohol and cigarettes. Last month the Central Bank increased interest rates to try to beat rising inflation.
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(News report from Issue No. 251, published on Oct. 9 2015)
OCT. 7 2015 (The Conway Bulletin) — Analysts in Kazakhstan have revised their inflation expectations down to 7.1% this year after official data showed that the consumer price index grew by only 1% in September.
Halyk Finance researchers said the numbers are much more encouraging than what they forecasted. This should keep inflation within the Central Bank target of 6-8%. Central Bank chairman Kairat Kelimbetov said he doesn’t rule out the possibility of a further increase in interest rates, after a new rate was set at the end of last week.
The Eurasian Development Bank (EDB) said in a report that Kyrgyzstan’s economy is poised to grow by 1.8% this year. This came after PM Temir Sariyev disclosed more optimistic numbers, pointing out that in Jan.- Sept. 2015, the country’s economy grew by 6%. The EDB said it expects a marginal slowdown in economic activity in Q4 2015.
The IMF has dramatically increased its forecast for Azerbaijan’s growth in 2015, from a meagre 0.6% in April to 4% in its latest report.
The international lender also revised inflation expectations downwards from 7.9% to 5% for 2015, more good news.
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(News report from Issue No. 251, published on Oct. 9 2015)
OCT. 6 2015 (The Conway Bulletin) – Piling more pressure on the Kazakh Central Bank, Vijay Mahadevan, CEO of steel maker ArcelorMittal Temirtau, said its decision to cut the tenge free from its US dollar peg in August was a good one but that it needed to devalue further. Mr Mahadevan said the tenge was overpriced against the rouble.
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(News report from Issue No. 251, published on Oct. 9 2015)
OCT. 7 2015, ALMATY (The Conway Bulletin) — The Consumer price Index (CPI) in Kazakhstan grew by 1% in September, official data showed, matching analysts’ predictions of accelerating inflation after a devaluation of the tenge in August.
Analysts had forecasted higher price inflation for September after the Central Bank cut its peg to the US dollar on Aug. 20, triggering a sharp fall in its value.
Halyk Finance, part of one of Kazakhstan’s largest banks, said that a drop in government spending, tighter economic policies and wage cuts had acted as a brake on inflation but it still measured 4.8%.
It said that there were inflationary pressures in the Kazakh economy but that the weaker tenge was not going to have as big an impact as analysts had thought at first.
“We do not expect weaker tenge to have a considerable effect on food price growth. We revised our year- end inflationary expectations downward to 7.1% y-o-y,” analysts Askar Akhmedov and Nurfatima Jandarova wrote in the Halyk Finance report.
These sentiments will come as a relief to the Kazakh Central Bank which has been under fire this year for its handling of the economy. Last week it raised its key interest rate to 16% from 12% to help strengthen the tenge and also dampen inflation.
One of the main inflationary pressures comes from a sharp rise in the price of petrol after the Kazakh government abandoned controls on it last month.
The official data showed that petrol prices rose 14% last month.
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(News report from Issue No. 251, published on Oct. 9 2015)
OCT. 7 2015 (The Conway Bulletin) – The Kazakh Central Bank will probably delay its high-profile move to Astana from Almaty because of the worsening financial crisis, Central Bank chief Kariat Kelimbetov said. The Central Bank is the last remaining major government institution based in Almaty. It was slated to move to Astana by 2017.
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(News report from Issue No. 251, published on Oct. 9 2015)
OCT. 5 2015, TBILISI (The Conway Bulletin) — Signalling that a regional economic crisis is worse than it had thought, the Georgian finance ministry said it would scrap a flagship policy that would have cut corporation tax and encouraged business growth.
The Georgian Dream government said earlier this year that it wanted to copy an Estonian tax policy that scrapped corporation tax on profit re-invested into businesses in order to generate more growth. The downside was that, in the short term at least, tax receipts would also drop.
And now, at a meeting to discuss the government’s proposed budget for 2016, deputy finance minister Giorgi Kakauridze said that plans to introduce the tax cuts this year had been pushed back indefinitely.
“This is quite a difficult process, fraught with quite a lot of risk,” media quoted Mr Kvirikashvili as saying. “Yes this [model] has its positive sides, but there are lots of negative aspects as well, so it has to be thoroughly considered. No final decision has been made in which direction this reform will go.”
The bottom line is that Georgia’s budget relies heavily on corporation tax. To cut this tax now, with the economy worsening, would be fool- hardy, the government appears to have decided.
Analysts, though, were scathing and said the tax reform should never have been discussed in the first place.
“It is not the first time Georgian Dream has promised changes they’re unable to keep. They should have known that the economic crisis would make this reform a bad idea.” said Giorgi Aptsiauri, economist at the Georgian Institute of Politics. “Income from corporation tax is a large part of the budget. They can not afford a cut in revenue with the current economic situation.”
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(News report from Issue No. 251, published on Oct. 9 2015)
OCT. 2 2015 (The Conway Bulletin) – Tourist numbers to Georgia are rising, the government said when it issued new data which showed that revenue from tourism rose to $430m in the second quarter of this year — a 6% increase from the same period in 2014. The government has been promoting Georgia heavily as a tourist destination.
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(News report from Issue No. 251, published on Oct. 9 2015)
OCT. 6 2015 (The Conway Bulletin) – Car imports to Azerbaijan halved in the first eight months of the year, the Azerbaijani statistics committee said. It said in Jan-Aug, Azerbaijan imported 21,147 cars, down from 39,198 in the same period in 2014. Azerbaijan’s currency has devalued this year and new regulations mean imported cars have to take a higher grade of petrol than previously, making it harder to import older cars.
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(News report from Issue No. 251, published on Oct. 9 2015)
OCT. 7 2015 (The Conway Bulletin) – Kazakhstan-based Eurasian Resources Group said it has opened two credit lines with Russian lender VTB, highlighting its need for cash during this turbulent economic period. The two loans total $352m and will be used to upgrade two aluminium plants.
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(News report from Issue No. 251, published on Oct. 9 2015)