Kazakhstan and Central Asia Business Forecast Report Q3 2008

Publication Date	July 2008
Publisher	Business Monitor
Product Type	Report
Pages	57
ISBN Number	not applicable
Product Code	BMI02092

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Summary

KazaKhstan Q3 2008 Coming Off the Boil The Central Asia region is still reaping the benefits of elevated commodity prices, which have helped drive healthy economic expansion and buttressed external and fiscal accounts. That said, with the global economy headed for tougher times, and inflationary pressures not subsiding, the chances of some cooling this year are strong. Kazakhstan, the regional economic heavyweight, is likely to remain slightly shell-shocked after the liquidity squeeze that followed in the wake of the international financial turmoil and this has implications for credit-conditions in adjacent states.

Developments on the political front are likely to remain largely unchanged. Ideological pluralism is still a somewhat distant prospect, as reflected in the near monopoly that ruling parties enjoy.

Tension, and even potential conflict, over regional water resources is emerging as a clear risk that could spell further clashes between people living in border regions.

A string of regional elections in 2007 have confirmed the lopsidedness of regional polities, where heads of states still command undue power and legislatures are dominated by ruling parties. Regional leaders are likely to make the most out of the increasing international clout they wield as a result of their natural resource endowments, and strategic geography. Indeed, greater assertiveness in foreign policy is already evident and there are fears of brewing resource nationalism. Relations with Russia will remain strong, although many states - perhaps most noticeably Kazakhstan - appear to be opting for a more pragmatic 'multilateral' foreign policy, courting the West and China in equal measure. Pipeline politics are likely to continue to make headlines, as Russia tries to maintain its solid influence over oil and gas transport routes. Meanwhile, despite ostensible shifts toward greater protection of human rights, we believe the heavy-handed state apparatuses that still operate across the region will continue to quash activity that is deemed hostile to the status quo.

Kazakhstan's borrowing spree on the international markets came to an abrupt end with the credit crunch, and many banks are still licking their wounds. This has impinged on liquidity conditions throughout the region due to the wide reach of Kazakh banks. Coupled with palpable inflationary pressures, this has resulted in tougher capital-raising conditions, which will leave a dent in business and consumer sentiment. The corollary is that we expect weaker growth figures in 2008, across the board, although prospects for a fairly swift rebound are good. Economic reforms are likely to proceed, albeit in a somewhat piecemeal fashion. Regional business environments are slowly improving, but the tentacles of the state still stretch into most sectors. Privatisation processes are under way across the region, although they may slow as a result of the global financial turmoil and public opposition. Higher food prices could beget controls on exports, as incumbents seek to prevent further erosion of real wages and concomitant public strife. Foreign investment could also slow this year, as a result of the gyrations on international financial markets. Fears of brewing resource nationalism could also lead to some caution among investors.

Content

Bmi Ratings
- Bmi Risk Ratings - Kazakhstan
- Bmi Risk Ratings - Kyrgyzstan
- Bmi Risk Ratings - Tajikistan
- Bmi Risk Ratings - Turkmenistan
- Bmi Risk Ratings - Uzbekistan
- Bmi Risk Ratings - Europe Tables
- Europe - Ratings League Tables
Executive Summary
Coming Off The Boil
Chapter 1.1: Political Outlook - Kazakhstan
- Domestic Politics
- Nazarbayev To Remain Firmly In Control
- President Nursultan Nazarbayev Continues To Deflect Speculation Of A Succession, And Looks Determined To Re-Stand
- For Office In 2012.
- Foreign Policy
- Relations With Russia: Amicable But Pragmatic
- Kazakhstan's Natural Resource Riches Are Bolstering The Country's Leverage Internationally, And We Expect The
- Government To Continue To Wield This Growing Clout In Foreign Dealings.
- Table: Kazakhstan Political Overview
Chapter 1.2: Economic Outlook - Kazakhstan
- Economic Activity
- Economy Lurching, But Should Rebound In 2009
- Headwinds, In The Form Of The Fallout Of The Global Credit Crunch And Mounting Inflationary Pressures, Are Likely
- To Take A Toll On The Growth Of The Kazakh Economy This Year.
- Table: Kazakhstan - Economic Activity
Chapter 2.1: Political Outlook - Kyrgystan
- Domestic Politics
- Tensions To Linger In H208
- The Kyrgyz Government Has Its Work Cut Out This Year, Amid Soaring Inflation, Wobbly Privatisation Plans And Ongoing
- Tensions Over Water Resources With Neighbouring Countries.
- Table: Krygyzstan Political Overview
Chapter 2.2: Economic Outlook - Kyrgystan
- Economic Activity
- Inflation Pressures Persisting
- Stubborn Inflationary Pressures Remain A Key Concern In Kyrgyzstan, With Both Economic And Political Implications.
- Table: Kyrgystan - Economic Activity
Chapter 3.1: Political Outlook - Tajikistan
- Domestic Politics
- Heightened Risks Of Civil Unrest
- Table: Tajikistan Political Overview
Chapter 3.2: Economic Outlook - Tajikistan
- Economic Activity
- Tackling The Growth Demons
- With Gdp Per Capita Forecast To Be Just Us$754 This Year, The Government Has Much Work To Do In Fostering Strong
- Economic Growth.
- Table: Tajikistan - Economic Activity
Chapter 4.1: Political Outlook - Turkmenistan
- Domestic Politics
- Proposed Changes To Improve Institutional Development
- We Believe That Proposed Changes To Turkmenistan's Constitution, Which Include Plans To Increase The Powers Of
- Parliament, Have The Potential To Improve Democracy In The Country Over The Long Run.
- Table: Turkmenistan Political Overview
Chapter 4.2: Economic Outlook - Turkmenistan
- Economic Activity
- Dual Exchange Rate Jettisoned
- The Berdymukhamedov Administration Appears To Stick To Its Words As Far As The Overhaul And Opening Of The
- Economy Is Concerned.
- Table: Turkmenistan - Economic Activity
Chapter 5.1: Political Outlook - Uzbekistan
- Domestic Politics
- Deeper Reforms Still Some Time Away
- President Islam Karimov's Landslide Re-Election For Yet Another Term Last December Means A Status Quo On The
- Policy Front And Likely Lethargy As Far As Reforms Are Concerned.
- Table: Uzbekistan Political Overview
Chapter 5.2: Economic Outlook - Uzbekistan
- Economic Activity
- Investment In The Energy Sector To Boost Growth
- Russian Oil Company Lukoil's Announcement That It Will Invest Us$5.5bn In Gas Exploration In Uzbekistan Is Still
- Significant For The Country's Economic Outlook.
- Table: Uzbekistan - Economic Activity
Chapter 6: Special Report
- Business Outlook For Global Frontier Markets
- Growing Fast On The New Frontier
- The 41 States That Bmi Examines In A New Report On Our Online Service May Make Up Only A Small Slice Of The World
- Economy, But They Possess Characteristics That Will See Them Gain Importance In The Eyes Of Investors And Global
- Businesses Over The Coming Years.
- Table: Frontier Markets - Key Data And Projections For Top 10 Countries
- Frontier Investment
- Potential And Pitfalls
- The Spectacular Macroeconomic Performance Of Frontier Markets In Recent Years Has Been Matched By Mildly
Successful Efforts To Deepen Capital Markets.
- Table: Gdp Per Capita, Us$ (In Order Of % Increase)
- Table: Diversity Through Frontier Markets - Correlation Coefficients January 2004-April 2008
Table: Frontier Market Indices
Regional Overview
Laos
Yemen
Democratic Republic Of The Congo
Cuba
Mongolia