Page 34 - BNE_magazine_06_2020 Growers

34 I Cover story bne June 2020
the fall in remittances from Russia, significantly lower external trade and domestic economic disruption.
Overall, Uzbekistan has a more balanced economy than some of its neighbours that are more tilted towards commodity exports. The EBRD points out that Uzbekistan’s exports are “much more diversified in terms of products and markets compared to other countries
in Central Asia”.
Gold stands out among Uzbekistan’s major exports. Gold accounts for over half of Uzbekistan’s commodity exports, which in turn make up around half of the country’s total exports. The EBRD points out that gold provides a “natural hedge in turbulent times”, while the World Bank notes that “an increase in gold prices would help offset the fall in the prices of other metals exported by the country.” Overall, Uzbekistan’s exports declined by 11% year on year in Q1, the EBRD said. This was not surprising, as China, the first economy to be struck
by the coronavirus (COVID-19), is Uzbekistan’s top export market, in common with most of Central Asia. Still, China absorbs only 14% of Uzbekistan’s exports, mainly natural gas.
On the other hand, the tourism and hospitality sector, which accounts for around 6% of GDP, is predicted to perform poorly this year as restrictions remain in place and people around the world are nervous about risking long- haul holidays.
Far frontiers
What the three countries tentatively pegged for growth have in common
is that they are on the far frontiers
of emerging Europe. All three are landlocked countries led by local “strongmen”. Over the last few years, growth has been robust, never dipping below 4% a year and reaching as high as 10-11% in Turkmenistan in the first part of this decade (though figures coming out of Ashgabat need to be treated with a great deal of scepticism). Not yet affluent enough to see the consumption-led growth that has driven their Central European peers in recent years, commodity exports are an
www.bne.eu
important part of their economies. They were therefore hit first by the Chinese contraction at the start of the year, and later (Turkmenistan and Uzbekistan)
by the oil price shock, although the lockdowns have been less painful than they have been to their consumer- orientated western peers.
Turkmenistan still claims to be coronavirus free – which no one believes – and is being hit mainly through
its trading relationship with China. While the government has introduced restrictions on movement, it “refrained from imposing a strict lockdown
that would have disrupted business activities”, said the EBRD.
“Turkmenistan still depends on China for most of its gas exports (more than 90% in 2018). The spread of the coronavirus has caused Chinese gas imports to decline by 17% y/y in the first two months of
fraction of the expansion it reported in previous years. However, this is likely based on official figures of around 6% growth a year for the last few years; in fact, there is speculation the economy has been in crisis for the last five years and could even have been shrinking before the pandemic.
Tajikistan also claimed until the end of April to have had no coronavirus cases (no one believed that either), but has now officially reported 2,929 as of May 26 – more than most countries in Central and Southeast Europe – and there are fears it could end up with the largest outbreak in the Central Asian region.
As a result of the crisis, growth is anticipated to either slow dramatically or fall into negative territory, as
a consequence of the pandemic and the related slowdown in trading partners Russia and China, according to the
“All of the main indicators took a plunge off the cliff in April”
2020, and in March they were suspended altogether. Turkmenistan’s economy as a whole will be hit by a reduction in the value of its gas exports,” wrote the EBRD earlier in May.
Turkmenistan faces other problems too, not least from extensive storm damage that reportedly forced many Turkmens
to sell cars, jewellery, livestock and household items to be able to afford food and medicine, according to RFE/ RL. Hundreds of people gathered in a rare protest on May 14 to call attention to the government's failure to provide assistance. Maksat Saparmuradov,
who founded the Conservative Party
of Turkmenistan in 2012 and formerly worked for the Turkmen security
forces, forecast that by June or July, Turkmenistan will face severe disruptions to its food security to the point that there will be riots and wide-scale mass unrest.
IFIs still forecast the country will achieve modest growth this year, albeit only a
World Bank. “These implications include the sharp decline of trade and lower commodity prices, a likely large drop
in remittances, and worsened prospects for transport and tourism industries.”
And things could get worse: “An extended COVID-19 outbreak, an escalation
of global trade tensions, or a deeper- than-expected economic slowdown
in the region’s large economies would negatively impact the Tajik economy through trade, FDI and remittance channels,” according to the World Bank.
"Also rans" still in with a chance
of growth in 2020
The three resilient ‘Stans are the only economies in the wider region where the EBRD and/or IMF forecast positive growth this year, but there is a longer list of “also rans” that have already ready managed to put in positive growth in the first quarter, even if they might run out of breath before they reach December’s finish line. And following the imposition