Following an widespread economic slump in the first quarter, the first half of the current calendar year has been marked by a general economic recovery in Central Asia and its outskirts, according to newly released numbers by the Moscow-based Interstate Statistics Committee of the Commonwealth of Independent States, which cover all former USSR republics with the exception of Georgia and the three Baltic states. Kazakhstan saw its gross domestic product increase by 4.1 per cent year-on-year in the first six months, the same as over the first quarter and outperforming the government’s annual forecast of 3.8 per cent. Industrial output increased by 5.2 per cent on-year in the first half.
The only country that keeps underperforming against the overall tide is Kyrgyzstan with just 0.1 per cent GDP increase and a net decline in industrial output of a staggering 6 per cent on-year in the first six months. For Uzbekistan and Tajikistan, these figures stood at 4.9/10.7 and 7.2/16.9 per cent on-year respectively. Oil-rich Azerbaijan posted 1.3 per cent overall economic growth and an increase of 3 per cent in industrial output on-year over the period.
Further north, the Russia Federation observed an increase in GDP of 1.3 per cent but industrial output posted 3 per cent increase. Belarus, like Russia and Kazakhstan a member of the Eurasian Economic Union, showed a remarkable recovery from a nearly two-year mini-recession with 4.5 per cent GDP and 7.8 industrial output growth on-year in the first six months.
Some of the short-term trends in the former Soviet domain, however, show discrepancies differing from the year-on-year statistics. From May to June, bad news turned into good news and good news into bad news for some of the CIS member states in the wider Central Asian region. Thus, Kazakhstan saw its industrial output’s month-on-month increase marginally shrink to 4.7 per cent while its GDP showed a net decline of 0.5 per cent.
Good news came for Kyrgyzstan with an on-month GDP growth of 1.2 per cent and an impressive industrial output increase of 6.2 per cent. If this trend can be sustained through the rest of the year, there might be some hope for the cash-strapped nation.
Like Kazakhstan, the Russian Federation saw its GDP marginally shrink by 0.2 per cent and its industrial output increase reduce to 1.7 per cent in June. Also Belarus experienced a momentary setback with a monthly decline of 0.5 per cent of its GDP and a 0.3 per cent one in industrial output. For Azerbaijan and Tajikistan, those figures stood at +0.6/+23.7 and 30.1/+6 per cent on-month respectively.
Not only do the overall numbers indicate considerable differences in the region’s states’ macroeconomic and industrial trends, but they also illustrate short-term volatility in economic development and rather sharp discrepancies in GDP and industrial trends. While growth in industrial output exceeding that of GDP within the same time span tends to indicate increased economic sustainability for the near future, the opposite is a warning sign that productivity is in decline with negative consequences for the structure of GDP. Such a trend is often accompanied by an increase in retail trade, indicating that populations are spending more than their productivity justifies.
One could view such a situation with Lenin’s remedy against underproductivity in an attempt to uphold a certain level of purchasing power by allowing part of the retail trade to remain outside state control. Subsequent Soviet regimes have tried to constrain overspending not by holding out on populations’ cash supplies but by putting limits on supplies of goods – thereby creating flourishing black markets while officially keeping macroeconomic trends under control. Post-Soviet states, while embracing (though to varying extents) market economy principles, face a major challenge here, since as of today the precarious balance between spending and producing can no longer be ignored.
By Charles van der Leeuw, based on data from the CIS Interstate Statistics Committee, Moscow.
