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Uzbekistan Update: The newest investment frontier
Waiting for a debut Eurobond. Uzbekistan will issue a debut Eurobond very quickly, once it receives an international credit rating. The process of getting a rating is ongoing and ministers hope it will be completed by the autumn and a debt issue done by the year-end.Possibly US$1 bln issue. The size range indication is US$300 mln to US$1 bln. Neighboring Tajikistan successfully raised US$500 mln last year but US$1 bln would suit Uzbekistan much better. It is on a fast-track reform path and would probably like to make a strong statement on international markets to reflect this.
Kazakhstan Update: The Twin Peaks Challenge
Strong growth based on oil. Kazakhstan’s economy grew by 4% YoY last year (from 1% in 2016) and looks set to replicate that strong growth again this year. The key driver of last year’s recovery and this year’s expected growth is the combination of rising oil output and the oil price recovery.
Russia & CIS Relevant Books 2017: Recommended Reading List
Most useful & interesting books in 2017. The first section of this report lists the most useful (for investors and business managers) books about Russia, the CIS and Central Asia which have been published in 2017 and which offer some insight into either the economy and politics or simply how Russia works. Specifically excluded from this list are most of the “tabloid” books focusing on, e.g. the impending doom of war or simply ranting about why Russia/the CIS is either so bad or so wonderful. We mention just a few which, e.g. attracted media attention.
Uzbekistan: Playing catch-up is neither a sprint nor a marathon
Uzbekistan is playing catch-up with the rest of the CIS and Eurasia after 25 years of isolation. President Mirziyoyev and his team have moved surprisingly quickly with some key changes that should yield a positive knee-jerk reaction from investors. But the “to-do” list remains long and daunting.
Ukraine: An economic & political obstacle course
Strong GDP recovery in 2016. Economic recovery accelerated into the end of last year, GDP expanding by 4.7% YoY in Q4. That brought full-year growth to 2.2%, reversing the near 10% contraction of 2015. That trend continued into 2017 but much of it is based on one-off factors.
Blockade a cause for concern. The trade blockade with Donbass is a concern; if it remains for long enough, it will hurt the economy. 2017 growth scenarios range from 1.5% to 3.0%. We have adopted a cautious approach with 2.1% for 2017, rising to 3.0% in 2018.
Agriculture has been a big winner. Ukraine became the third-largest exporter of agricultural goods to the EU last year. Its grain harvest increased 27.5% YoY in 2016.
State debt at 76% of GDP. At end-December, total external state debt equaled approximately 76.5% of last year’s GDP.
Kazakhstan: 3-D Printing a New Economy
Radical changes. After spending several years of trying to mitigate the impact of the currency collapse and economic slowdown, the government has adopted a radical program to try and revive the economy and attract a bigger volume of inward investment. This includes: Higher budget spending and a 3% deficit; Build up debt and take more money from the National Fund; Take the bad assets from banks into a Bad Bank; Tackling high-level corruption; Changes in government; Constitutional changes aimed at calming concerns over succession.
3rd phase of modernization. The Nurly Zhol modernization program has been re-invigorated with the aim of creating much greater diversification in the economy and boosting the role of SMEs.
3-D printing and food processing. Key target industries include agriculture, food processing, transport & logistics, financial services and technology. The government has particularly highlighted 3-D printing as an industry in which it wants to see Kazakhstan take a lead.