Economic Developments - May 2017

In his statement at BRF, Mitziyoyev expressed hope that China-Kyrgyzstan-Uzbekistan railway network (including Afghanistan), could be integrated into the Belt and Road, via connections to ports in Pakistan and Iran. 

Speaking at the Summit, Nazarbayev stressed that Central Asia has regained its strategic importance and has become the main bridge between the world’s largest markets.

Xi Jinping said China is willing to work with neighbors to push their comprehensive strategic partnership to a higher level and broader domain. He called for strengthening law-enforcement cooperation and crack down on forces of separatism, terrorism and extremism.

After a slowdown in 2016, growth in Kazakhstan is expected to strengthen to 2.5% this year, reflecting higher oil production and effect of substantial fiscal stimulus spending. Inflation has come down. Medium-term outlook has improved, with growth in non-oil sector of economy expected to gradually pick up to 4%, benefitting from structural reforms and a resumption of bank lending. Kazakhstan is going through some of the toughest years since it achieved independence a quarter of a century ago. Following OPEC’s push to raise world oil prices, Kazakhstan’s growth is showing signs of improving with the country increasing its oil production to its previous level. Oil production declined by 1.7% to 79.6mn tonnes in 2015 and further to 75mn tonnes in 2016. However, going forward the government expects Kashagan to add between 4-7mn tonnes of oil a year to the country’s production, bringing up overall production to approximately 85mn tonnes. 

According to World Bank, Turkmenistan’s GDP growth rate is projected to increase marginally in 2017, with a moderate recovery in hydrocarbon prices and lessened exchange rate pressures. While rising hydrocarbon prices are expected to narrow the current account deficit in 2017, it will remain elevated due to slow import adjustment process. 

Construction of Turkmen section (214 kilometers) of the Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline is proceeding as per schedule. It was earlier reported that Islamic Development Bank (IDB) allocated a US$700 million loan to Turkmenistan for financing construction of Turkmen section of TAPI pipeline. Asian Development Bank (ADB) has indicated that it may finance the over US$10 billion pipeline project.

Growth in Central Asia and the Caucasus is expected to pick up in 2017 as external factors improve. After a disappointing 2016, growth is expected to be 3.1 percent in 2017 and 4.1 percent in 2018. This is largely due to firmer growth in Russia, an upgraded outlook for China, and a partial recovery in commodity prices.

Iran is filing a lawsuit in International Court of Arbitration against Turkmenistan for its failure to supply gas to Iran in winter. Issues covered in the complaint include price of gas, damage inflicted by Turkmenistan on Iran, and quality of gas delivered to Iran.

 

May 31, 2017

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About the Author

Ambassador Ashok Sajjanhar

Former Ambassador of India to Kazakhstan, Sweden and Latvia; President, Institute of Global Studies and Distinguished Fellow, Ananta Centre

Ambassador Ashok Sajjanhar belongs to the Indian Foreign Service and has acquitted his responsibilities in the diplomatic service for 34 years. He was Ambassador of India to Kazakhstan, Sweden and Latvia and has worked in senior diplomatic positions in Indian Embassies/Missions in Washington DC, Brussels, Moscow, Geneva, Tehran, Dhaka and Bangkok and also at Headquarters in India. He negotiated for India in the Uruguay Round of Multilateral Trade Negotiations and in negotiations for India-EU, India-ASEAN and India-Thailand Free Trade Agreements.

He contributed significantly to strengthening strategic ties and promoting cultural cooperation between India and USA, EU, Russia and other countries.Ambassador Sajjanhar worked as head of National Foundation for Communal Harmony to promote amity and understanding between different religions, faiths and beliefs. Ambassador Sajjanhar has been decorated by Governments of Kazakhstan and Latvia with their National Awards and by Universal Peace Federation with Title of ''Ambassador of Peace.'' Currently Ambassador Sajjanhar is President of Institute of Global Studies, New Delhi. He writes, travels and speaks extensively on issues relating to international relations, foreign policy and themes of contemporary relevance and significance. He appears widely on TV panel discussions. Ambassador Sajjanhar is interested in reading, music and travelling. His wife Madhu is an economist and an educationist. They have a son and a daughter both of who are accomplished singers. Their son passed out of Yale University and their daughter is pursuing her PhD at University of Minnesota.