Uzbekistan

UZBEKISTAN is a dry, landlocked country; 11 per cent of the land is intensely cultivated, in irrigated river valleys. More than 60 per cent of the population lives in densely populated rural communities. Export of hydrocarbons, primarily natural gas, provides about 40 per cent of foreign exchange earnings. Other major export earners include gold and cotton. Uzbekistan is now the world’s second-largest cotton exporter and fifth largest producer. Uzbekistan has posted GDP growth of over eight per cent for the past several years, driven primarily by rising world prices for its main export commodities - natural gas, cotton and gold - and some industrial growth. Uzbekistan has seen few effects from the global economic downturn, primarily due to its relative isolation from the global financial markets.

The Uzbekistan economy was almost unaffected by the global economic crisis of 2008/2009. In 2008-2010, Uzbekistan GDP increased by 8.1-9.0 per cent, due to favorable commodity prices and government stimulus package. Nevertheless, the Uzbekistan economy still faces such important issues as increasing inflationary pressures and the increasing role of government in the economy. GDP increased by 8.3 per cent in 2011. Inflation was 7.6 per cent compared to 7.3 per cent as of 2010.

Industrial production increased by 6.3 per cent and agricultural production by 6.6 per cent last year. The construction work volume increased by 8.5 per cent, consumer goods production by 11 per cent with paid services rendered to the population by 16.1 per cent.

Uzbekistan has experienced a trade surplus in recent years. Major exportable items of the country are Gold, cotton, manufactures, and textiles. Exports partners of the country are South Korea, Turkey, Japan, US and Russia. Metal, chemicals and foodstuffs are the important importable items of the country. For imports Uzbekistan depends upon the countries such as Germany, South Korea, US and Kazakhstan. Foreign trade turnover in 2011 increased by 15 per cent up to $25.537 billion compared to 2010. Exports increased by 15.4 per cent, up to $15.027 billion and imports by 14.5 per cent, up to $10.509 billion.

The government of Uzbekistan expects that the growth in GDP will be at least eight per cent in 2012-2015. The Minister of Economy of Uzbekistan expects that the economy will grow by 8.1 per cent in 2013, 8.2 per cent in 2014 and 8.2 per cent in 2015. Uzbek inflation rate is expected at 7-9 per cent in 2012 and 2013. The inflation level is expected at 6-8 per cent in 2014 and 6-5 per cent in 2015. The industrial output is expected at the level of 8.6 per cent in 2012. The figure should make up 8.4 per cent in 2013, 9.1 per cent in 2014 and 9.3 per cent in 2015. The agriculture output of the country will grow by 6.9 per cent this year, 5.9 per cent in 2013, 5.2 per cent in 2014 and 5.1 per cent in 2015.The growth of capital investments in Uzbekistan makes up 9.3 per cent in 2012, 9.1 per cent in 2013, 9.4 per cent in 2014 and 9.7 per cent in 2015. The country’s external debt will be increased to 20.2 per cent of GDP this year and to 22.8 per cent next year.

The IMF kept its forecast on economic growth for 2012 at the level of seven-per cent, slower than 8.3per cent in 2011. It sees the GDP to grow by 6.5percent in 2013. Inflation will be 12.7percent in 2012 and 10.9percent in 2013 against 12.8percent in 2011. Current account balance surplus made up 5.8percent to GDP in 2011. The figure will reach 2.8percent in 2012 and three-percent in 2013.The World Bank has also kept its growth forecast unchanged for Uzbekistan in 2012-2013.Its new report 2012 reveals that economy will grow by eight-percent in 2012 and 6.5percent in 2013. In line with the forecasts of the World Bank specialists, the GDP of Uzbekistan will also increase by 6.5 per cent in 2014. Current account balance will make up 4.4 per cent to GDP in 2012 and 4.4 per cent in 2013. The figure will reach 4.5 per cent in 2014.

The Asian Development Bank has lowered the growth forecast for Uzbekistan’s GDP from the previously projected 8.4 per cent to eight per cent in 2012.According to a survey, Uzbek economic growth in Uzbekistan will amount to 7.9 per cent in 2013. The industry and service sector will be the main factors of economic growth. The growth of production volumes in agriculture will be achieved by increasing the production of fruits and vegetables. The bank retained its September forecast for inflation at 9.5 per cent in 2012. Inflation will hit nine- percent in the republic in 2013.The current account surplus in 2012 will hit 7.5 per cent of GDP compared to the earlier projected 12.6 per cent, with six per cent of GDP in 2013. Import growth will hit 8.3 per cent in 2012 and decline to 2.8 per cent next year.

Azerbaijan

AFTER successfully weathering the financial crisis, Azerbaijan’s economy has slowed as the pace of oil extraction decelerated.

The oil output decline has been only partially offset by robust growth of the non-oil sector, mainly stimulated by budget expenditures. The diversification of the economy remains important as risks associated with high oil dependence became apparent during the crisis, when oil prices declined. Immediate macroeconomic risks continue to be mitigated by a very strong fiscal position. The non-oil economy continued to perform strongly in 2011, and the near-term economic outlook is generally favorable. A 10 per cent contraction in oil production in 2011 was almost entirely offset by non-oil growth of 9.4 per cent, mainly in construction, and services.

Hydrocarbon output is expected to remain unchanged this year, but non-oil GDP could register six-per cent growth and reach its potential level by end 2012, largely supported by public investment spending. Inflation has moderated largely because of a fall in global food prices. It is expected to reach 5 percent by the end of the year. While underlying core inflation has broadly stabilized in recent months and could result in inflationary pressures later in the year. Spending restraint since the middle of 2011 helped contain demand pressures. Continued spending restraint would help keep inflation in check. The ratio of non-oil fiscal deficit to non-oil GDP for 2012 is projected at 38 percent, compared to 41percent in 2011.

Azerbaijan is the third-largest oil producer in the former Soviet Union after Russia and Kazakhstan. Diversification of Azerbaijan’s economy remains a major challenge, as the risks associated with high dependence on oil have become apparent during the crisis, when world oil prices fell down. After successfully overcoming the financial crisis the growth of Azerbaijan’s economy slowed down due to slowdown in oil production. Decrease in oil production was only partially offset by strong growth of non-oil sector, which was stimulated by budget costs. According to EBRD, Azerbaijan’s GDP growth in 2012 will amount to 3.5 per cent and three per cent in 2013. Overall GDP grew by a mere 0.1 per cent in 2011. The economy grew by 1.5 per cent in the first half of 2012.

According to the government sources, GDP growth is projected to accelerate to 4.1 per cent in 2012 but to moderate to 3.5 per cent in 2013, mirroring higher oil output and continued expansion in the non-oil sector. Oil output is forecast to pick up moderately in 2012. Despite the central bank’s goal of reducing inflation to 7–7.5 per cent in 2012 and 2013, various factors could take inflation to 9.0 per cent in 2012 before it subsequently recedes to 8.5 per cent in 2013. Strong domestic demand fueled by oil income, rising public sector consumption and expanded domestic credit to the economy may heighten inflationary pressures in 2012. The completion of grain-storage and improved food-processing facilities should, however, reduce food imports, helping moderate inflation in 2013.

The key challenges facing Azerbaijan are promoting sustainable economic development in the non-oil sector, improving infrastructure, making social development more inclusive by reducing economic disparities among regions, promoting good governance, and improving the climate for private sector growth. Factors driving economic growth in Azerbaijan are changing, according to the country’s government. Last year, the country’s economic growth was not related to the oil sector. This year, economic growth will also be supported by the non-oil sector. Under the primary macroeconomic forecasts of the government of Azerbaijan for 2013, the GDP growth rate in the coming year will exceed five per cent; non-oil sector will grow by more than nine per cent.

The Azerbaijan State Statistics Committee reports that as of August 1, 2012 non-oil GDP increased by 10.5 per cent versus Jan-July 2011. Azerbaijan’s overall GDP for the reported term reached AZN 30.783 billion with a rise of 1.6 per cent. This July non-oil GDP was equal to 57.5 per cent of overall GDP and for Jan-July – 49.4 per cent versus 48.3 per cent in 2011. Non-oil GDP for 2012 still makes up $19.347 billion versus $30.729 billion for the past year. Moody’s estimates that Azerbaijan’s oil-based economy will produce solid growth of 5.7per cent in 2012 and 5.1percent in 2013 , following 0.1 per cent in 2011, driven by oil exports and government spending, which will support the non-oil economy and credit conditions in the country.

Tajikistan

TAJIKISTAN has one of the lowest per capita GDPs among the 15 former Soviet republics. Because of a lack of employment opportunities in Tajikistan, as many as a million Tajik citizens work abroad, almost all of them in Russia, supporting families in Tajikistan through remittances. Less than seven per cent of the land area is arable. Tajikistan’s economic situation remains fragile due to uneven implementation of structural reforms, corruption, weak governance, seasonal power shortages, and the external debt burden. Food and fuel prices in 2011 increased to the highest levels seen since 2002 due in part to an increase in rail transport tariffs through Uzbekistan. Tajikistan imports approximately 60 per cent of its food and 90 per cent of that comes by rail.

Huge budget expenditures for infrastructural and anniversary projects on the occasion of the 20th anniversary of Tajikistan’s independence contributed to inflation growth in the country. ADB experts predict reduction in the economic growth in Tajikistan in 2012. Economic growth is predicted to reduce to 5.5 per cent in 2012. Tajikistan’s GDP in 2011 made 7.4 per cent against 6.5 per cent in 2010. GDP growth is closely connected to remittances, growth of agricultural production, services and industry. Taking into account record amount of money remittances, which made about $3billion in 2011, a 13.5 per cent growth in services represents the main factor of growth. Slowdown in economic growth in partner countries will cause its reduction in Tajikistan by 5.5 per cent. ADB expects a six per cent GDP growth in 2013.

According to ADB, inflation level in the country in the next two years is expected to make 8.5-9 per cent. In 2011, increase in world prices of foodstuffs and fuel and high inflow of remittances contributed to the growth in internal demand for import and have doubled the average annual inflation level from 6.5 per cent in 2010 up to 12.5 per cent in 2011, even though the basic inflation remained moderate making 5.7 per cent. Tajikistan will face instability in the 2012-13 forecast period. Poverty, unemployment, austerity, power shortages and external disruption are possible sources of political de-estabilisation. Real GDP will grow by an annual average of 5.3 per cent in 2012-13. The economy is progressing remarkably smoothly, according to the latest official figures.

Tajikistan’s economy grew by 7.4 per cent in the first six months of 2012, according to the Eurasian Bank for Development.

Industrial growth gained 12 per cent during the six-month period versus the same time frame a year earlier, boosted by a nearly two-fold increase in textile and clothing production. Inflation continues to decline and was measured 4.6 per cent in June 2012 over June last year. Annual GDP growth is expected to rise by six per cent in the next two years. Trade and paid services contributed 20 per cent and 13 per cent respectively to the GDP. But the bank warned that excessive dependence on remittances and undiversified exports could present problems to the economy. The international lender warned that Tajikistan’s large and ongoing trade deficit is persisting.

Tajikistan is the poorest of the five Central Asian states. 46.7 per cent of the population lives in poverty and 13.8 per cent live in absolute poverty. Out of 7.1 million, 73 per cent live in rural areas. The main environmental problems in Tajikistan include unsustainable agriculture practices leading to land degradation, lack of reliable energy supply, high vulnerability to natural disasters and climate change, and water and food insecurity. Over one million people in Tajikistan, primarily in rural areas, have little or no access to an adequate energy supply, particularly during the winter. The absence of a reliable electricity supply has forced large parts of the rural population to increasingly turn to the burning of conventional biomass and fossil fuels to meet their energy needs.