IMF Predicts Economic Downturn in Central Asia

The International Monetary Fund recently released a series of predictions in its annual Regional Economic Outlook Update for the Caucasus and Central Asia, in which it details expectations which largely show economies in Central Asia slowing throughout the remainder of 2014, from 6.5% to 6%. The economic downturn in Central Asia can be ascribed chiefly to economic downturns in Russia, where the economy recently entered a recession, as well as In China and Turkey, which currently figure prominently as labor destinations for Central Asian émigrés.

Similarly, growth patterns throughout emerging Central Asian nations have not continued on par with previous forecasts made about the region’s growth, and are indeed expected to be lower than in 2013. Oil and gas exporters like Azerbaijan, which experienced a 5.8% growth in its GDP during 2013, is predicted to drop nearly a percent and grow at a rate of 5% during 2014, and 4.6% during 2015. Other exporters of gas and oil such as Uzbekistan and Kazakhstan are also expected to see similar drops in growth, with Turkmenistan the only one of the four oil and gas nations expected to grow during the next two years.

Remittances, a topic which garners little attention and yet plays an important role in the economic growth of some of the poorer Central Asian states, will fluctuate in accordance with the strength of the economies which employ the greatest amount of workers. Tajikistan, which has previously attempted to hide its own remittances data under the pretext of it potentially becoming “politicized,” currently relies on remittances for 47% of its GDP, according to the World Bank. As the economic systems that prop up many Central Asian nations begin to look more inconsistent, it will become increasingly incumbent on Central Asian economies to rely on domestic production for a greater share of overall GDP.

News Briefs: 

  • Trilateral talks between Russia, Ukraine, and Kazakhstan were called for by the head of the Kazakh space agency, Talgat Musabayev to discuss the construction of a new launch facility at the Baikonur Cosmodrome. Undoubtedly concerned due to the crash of a Proton rocket earlier this year, which disseminated toxic rocket fuel across a wide area, Musabayev called on Russia to use Zenit rockets in place of the more toxic proton variety. The new Zenit rockets are also Ukrainian-made, but with ongoing violence throughout the country and Yanukovych ousted, the future of the arrangement is in question. The new launch facility will be named Baiterek, which was originally slated to become the launch pad for the Russian Angara rocket, but will instead be used for the Zenit rocket as Russia is building its own launch facility to host the Angara at Vostochyny.
  • A Kazakh judge, Kuplash Otemisova, was imprisoned for releasing a Russian businessman convicted of ordering a murder. She ruled last August that the 12 year sentence on Aleksandr Sutyaginsky should be replaced with a suspended six-year penalty, her reasoning being the killing never took place.
  • Iran and Turkmenistan negotiated a deal this past Sunday by which Iran will import goods from Iran in exchange for Turkmen natural gas. This is the only the latest in a long string of deals intended to quickly open up Iran’s economy with sanctions lifted last November. Iran will reportedly export machinery, construction materials, sedans, buses, foodstuffs, agricultural and petrochemical products, and home appliances. The power imported from Turkmenistan may help the country deal with a chronically underserved power market.
  • Chinese police are searching for 10 family members of the bomber that attacked the Urumqi train station on Wednesday in Xinjiang province. Less than two months after the knife massacres at a train station in Kunming, this additional attack is suspected to have been perpetrated by Uighur separatists. More than 100 people have died in attacks throughout the region in the past year.

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