Central Asia on ‘firm recovery path’, EBRD says
July 22. Central Asia Newswire
The Central Asian republics are on a “firm recovery path” following the 2009 global financial crisis, the European Bank for Reconstruction and Development (EBRD) said in a Friday report.
In its “Regional Economic Prospects in EBRD Countries of Operation: July 2011” report, the bank attributed much of that recovery on the economic and fiscal policies taken by Russia and Kazakhstan, which in turn have benefited neighboring states.
Strong economic recovery in the two leading ex-Soviet economies has been driven higher oil prices, wide-ranging stimulus packages and solid support for their banking sectors, it said.
Kyrgyzstan, Tajikistan and Uzbekistan have benefited from some of that success by seeing increases in trade turnover and increased remittances.
Rising global commodity prices has added to that recovery for some of the energy-rich Central Asian states.
The region’s dependency of the international prices of food and fuel could derail the current recovery trend, the EBRD said.
Also, heavy state interference and ownership of the banking sectors within the Central Asian republics could stifle market forces that influence loans and credit allocations.
Kazakhstan and Tajikistan are particularly vulnerable in this area.
Non-performing loans in Kazakhstan are stuck at around 25 percent of total loans, the bank noted. The Kazakh central bank is also still heavily involved in stabilizing the exchange rate despite removing the corridor in February.
Kyrgyzstan continues on the road to recovery thanks to improved political stability, fiscal stimulus and higher gold prices.
Tajikistan is gaining from strong regional growth, as well as high aluminium and cotton prices, and growing remittances.
The economy of Turkmenistan is largely driven by huge state construction projects and increasing gas exports to China and Iran.
Uzbekistan’s economy was mainly untouched by the global financial crisis and is expected to expand by around 7 percent this year.
Uzbekistan and Kyrgyzstan were the strongest economic performers in the region during the first quarter of 2011, the bank said.