Russia’s Central Bank has again been forced to intervene in the Russian economy. The latest intervention, which totals over $1.8 billion USD, brings the total amount of funds spent by the Russian CB up to nearly $55 billion this year alone. The fact that Russian intervention into its own economy began prior to the levying of sanctions by the United States and Europe provides a strong indication of the weakening state of the Russian economy.
The stimulus funds were primarily directed towards strengthening the ruble, which has been collapsing at a vertiginous pace over the last few months, and providing some degree of support for principle profit-making industries. Despite the CB’s maneuver, the ruble has continued to spiral downward (see this chart), with sanctions relief far from even being discussed in Washington or Brussels. Given this fact, and the fact that Russia’s energy sector has begun to feel the heat of Western sanctions, future Central Bank interventions into the economy are expected to continue, which could see Russia’s still large foreign reserves dwindle in terms of size.
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- Kazakhstan’s government has slashed growth forecasts for the year as the economy experiences complementary slowdowns in Russiaand a drop in the price of oil. The Kazakh economy expanded by 6 percent in GDP last year, with a 5 percent rise in 2012. The government will now revise growth rates downwards, after statemetns made by Kazakh National Economy Minister Yerbolat Dosayev told a news conference. He was especially concerned over the crashing value of the Brent crude oil benchmark price.
- Emomali Rahmon arrived in Minsk yesterday to participate in a summit of the CIS and Interstate Council of the Eurasian Economic Community. The CIS leaders are considering 17 draft documents aimed at promoting interstate cooperation. Bilateral relations between Belarus and Tajikistan are growing, indicating perhaps that Rahmon is warming up to the idea of a closer economic relationship with the EEU.
- Freight transportation along the new Kazakhstan-Turkmenistan-Iran railway route will supposedly reach 15 million tons by 2020, according to Turkmen Ambassador Extraordinary and Plenipotentiary to Kazakhstan Magtymguly Akmyradov. The railway runs for the longest stretch over Turkmenistan, who just recently began construction on its section earlier in the week. Bilateral trade between the two states stands currently at $340 million, far lower than projected estimates once the railway is completed.
- The European Union and Kazakhstan announced that they are agreeing to a new “partnership and cooperation pact,” aimed to bolster cooperation in food safety to energy, to fighting terrorism, while not affecting tariffs. Thus it falls short of the “association agreement” that engendered the crisis in Ukraine when Russia decided to block it. The EU officials emphasized that Kazakhstan’s deal would not affect any relations with Russia, economic or otherwise. Jose Manuel Barroso, the EU Commission’s Chief, said that the EU was open to building relations with members of the Customs Union both as a whole and bilaterally.
- According to the IMF top executive, Christine Lagarde, Ukraine is going to need additional bailout funding from outside their coffers to avoid a government default. The IMF originally designed a $30 billion international bailout program in April, but only pledged $17 billion and looked for more bailout investors. Ukrainian manufacturing infrastructure has mostly been destroyed and with rising military costs and falling revenues, the IMF predicted that funding requirements could rise to as high as an additional $19 billion if no significant progress is made at reducing violence and rebuilding.