MARCH 16 2015 (The Bulletin) – Food prices in Azerbaijan rose in February by 6.6%, media reported quoting the state statistics agency. Economists have been warning that Azerbaijan may be facing inflation after a sudden devaluation by 33% of the manat in February.
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(News report from Issue No. 223, published on March 18 2015)
MARCH 4 2015 (The Bulletin) – The price of staple foods in Georgia is rising, media reported. Interpressnews.ge said cooking oil, buckwheat, sugar, salt and other goods have all increased in price because of the devaluation of the Georgian lari. Economists have been warning that weakening economic conditions could trigger inflation.
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(News report from Issue No. 222, published on March 11 2015)
>>Economy minister warns of more price rises>>
FEB. 17 2015 (The Conway Bulletin) — Kyrgyzstan’s economy minister, Temir Sariev, said that inflation could hit 13% this year, double the rate the government is aiming for.
Mr Sariev said that a combination of events had forced a large price jump in Kyrgyzstan — the falling Russian rouble, a slowdown in the economy and joining the Kremlin-steered Eurasian Economic Union.
In December annualised inflation measured over 10%, sharply up from the beginning of the year.
Last month the Kyrgyz Central Bank raised interest rates by 50 basis points to 11%, its highest rate since 2012.
But alongside the rouble devaluation and entry to the Eurasian Economic Union, Mr Sariev said that other problems had also weighed on the economy and had made the start of 2015 difficult.
“Seasonal water shortage has brought two big problems for us. Firstly, agricultural products produced in fewer amounts. Second, less energy produced. As a result, we had to buy it in Kazakhstan,” he said according to media reports.
The problem for the government is a weak economic outlook triggers resentment.
Opposition parties have already said that intend to hold a series of rallies in Bishkek this spring themed around what they described as a new economic crisis.
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(News report from Issue No. 219, published on Feb. 18 2015)
>>Inflation and Russian rouble devaluation are pressuring Armenian Central Bank>>
FEB. 10 2015 (The Conway Bulletin) — Armenia’s Central Bank increased its key interest rate to 10.5% from 9.5%, the third rate rise since December, because of rising inflation.
Data from the Central Bank showed that annualised inflation hit 4.3% in January which is at the top end of the government’s target range.
Central Banks across Central Asia and the South Caucasus have steadily been increasing interest rates to keep pace with Russian monetary moves. Russia is trying to defend its currency against both falling oil prices and the impact of sanctions.
Armenia’s economy is particularly tied into Russia’s economy. At the beginning of the year, Armenia also joined the Kremlin-lead Eurasian Economic Union which many see as a Moscow inspired political union.
Inflation in Russia has hit around 12% and is still rising. Economists said this would undoubtedly push the price of goods in Armenia up too.
Before the Central Bank raised interest rates in December, the Armenia’s interest rate had stood at 6.75%.
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(News report from Issue No. 218, published on Feb. 11 2015)
JAN. 29 2015 (The Conway Bulletin) — Inflation in Kyrgyzstan has broken through the 10% barrier, a senior official at the national statistics office was quoted by media as saying. The official, Malika Abdukadirova, said annualised inflation hit 10.4% in December mainly because of a rise in the price of foodstuffs.
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(News report from Issue No. 217, published on Feb. 4 2015)
>>Armenia’s economy is closely linked to Russia’s fortunes>>
JAN. 30 2015 (The Conway Bulletin) — Ratings agencies Fitch and Moody’s downgraded Armenia’s bond ratings to negative from stable, another sign that the Armenian economy is in for a turbulent few months.
Fitch said that it expected Armenia’s economy to slip into a recession this year and the deficit to widen.
“Remittances amount to about 15% of GDP and fell by about 30% during the last months of 2014 as 90% of the total come from Russia,” it said in a research note.
Armenia has been hit by the drop in the Russian rouble and the turmoil in Russia’s economy, triggered by a fall in oil prices and sanctions imposed by the West after the Kremlin’s intervention in Ukraine.
Over the past seven months, Armenia’s dram currency has fallen by nearly 20% against the US dollar despite a steady increase in interest rates.
Of course, it’s not just Armenia which is exposed to the drop in Russia’s economy and currency. The rest of Central Asia and the South Caucasus have also been badly hit.
Armenia, though, is particularly closely linked. It is desperately hoping that there will be some improvement in Russia’s economy.
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(News report from Issue No. 217, published on Feb. 4 2015)
JAN. 30 2015 (The Conway Bulletin) — Georgia’s Central Bank chief, Georgy Kadagidze, said he would tighten monetary policy next week after another drop in the value of its lari currency. Mr Kadagidze has said that he would not spend the bank’s reserves heavily to prop up the lari which has lost around 15% of its value since November.
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(News report from Issue No. 217, published on Feb. 4 2015)
JAN. 27 2015 (The Conway Bulletin) — The price of wheat in Kyrgyzstan has reached a record high because of a poor crop last year, high energy prices and the falling value of the Kyrgyz som, media quoted media reported. Kyrgyz households are sensitive to food price fluctuations as they spend around 60% of their income on food.
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(News report from Issue No. 216, published on Jan. 28 2015
>>Pressure building on the C.Bank as lari hits 10-year lows>>
JAN. 27 2015 (The Conway Bulletin) — Georgia’s economic policymakers have said that they will not intervene to halt the fall in the value of the lari currency.
Pressure has been building on the Central Bank as the lari has lost 7% of its value against the US dollar this year, adding to a 12% loss at the end of 2014.
But economy minister, Giorgi Kadagidze, said that the Central Bank would not start spending its reserves to prop up the currency.
The lari is now trading at over 2 to the US dollar. This is the cheapest that the lari has been for over a decade.
The big worry for Georgian economic decision makers is that inflation will start creeping up.
At its last meeting on interest rates in December, the Central Bank elected to keep the key rate unchanged. The Central Bank chief, Giorgi Kadagidze, said that if there was any hint of inflationary pressure appearing he would raise interest rates.
Georgia had been less affected by the turmoil in Russia’s economy and the drop in oil prices over the past six months. Clearly the poor economic data is beginning to catch up with it.
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(News report from Issue No. 216, published on Jan. 28 2015)
JAN. 22 2015 (The Conway Bulletin) — Armenia’s Central Bank increased its refinancing rate, the cost it charges other financial institutions to borrow money, by 1% to 9.5% to slow inflation. In December, the Central Bank increased the refinancing rate to 8.5% from 6.5%. New data showed prices rose 4.6% in December.
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(News report from Issue No. 216, published on Jan. 28 2015)