Coronavirus economics watch: Central Asia and the Caucasus, September 2020

26 digest, updated daily, on how the pandemic is plundering Eurasia’s economies.


  • The Central Bank expects GDP this year to decline by 6.2 percent, rather than by 4 percent as previously announced, CivilNet reported on September 15.
  • In the first seven months of 2020, construction declined by 22.6 percent, trade turnover 11 percent and services 9.3 percent. But industrial output rose in the same period by 1.3 percent and electricity generation by 3.4 percent, the government Statistical Committee said at the end of August.
  • Russian remittances in the first quarter fell 12.9 percent year-on-year, according to the latest Russian Central Bank data available on August 26.
  • A poll conducted in July by the Caucasus Research Resource Center for the World Bank found that 54 percent of Armenians say their financial situation has worsened due to the pandemic, CivilNet reported on August 25. Over one-third (35 percent) of respondents lost work or income and 33 percent expect the situation to worsen. Among respondents who do not support more lockdown restrictions, 66 percent attributed their decision to economic concerns. An English version of the survey can be found here.
  • Armenia’s public debt grew 8.4 percent in the first seven months of 2020, reported on August 18, to 58 percent of GDP.


  • Industrial output fell 3.1 percent in the year through August, Turan reported on September 14, citing the State Statistics Committee.
  • Customs revenues fell 8 percent year-on-year in the first eight months of 2020, Turan reported on September 11.
  • The Finance Ministry forecasts state budget spending to decline 6 percent next year with a deficit amounting to 2 percent of GDP, Azeri Daily reported on September 6. This year the current account deficit will top $1.5 billion, or 3.7 percent of GDP.
  • The Asian Development Bank predicted GDP to decline 4.3 percent this year, it said in a September 15 forecast. The State Statistical Committee said the same day that GDP declined 3 percent year-on-year in the first eight months of the year.
  • An August report by Khazar University estimated that 1.3 million people may be rendered unemployed by the pandemic, though “the government’s aid package covered about half of that in April-May.” (The World Bank in 2019 calculated Azerbaijan’s labor force at 5.1 million).
  • Non-oil exports fell 8.6 percent in the first seven months of 2020 compared to the same period last year, the government-run Center for Analysis of Economic Reforms and Communication said on August 31. Exports to Turkey fell, while those to Russia and China rose.
  • Housing construction has “collapsed,” Turan reported on August 26, citing a 17 percent decline in square meters built in the first seven months of the year.
  • Gold exports fell 6.8 percent in the first half of 2020, compared to the same period of 2019, Turan reported on August 20.
  • Unemployment has increased by 36.6 percent since April 1, at the beginning of the pandemic, Turan reported on August 17.


  • Trade turnover fell 16.7 percent year-on-year in the first eight months of 2020, to 7.02 billion, the National Statistics Office said on September 14. Exports fell 14.7 percent and imports 17.5 percent.
  • The National Bank has spent at least $370 million defending the lari between March 13 and September 10, breaking a record set in 2010. The head of the bank said on September 15 that he expects to spend another $200 million defending the currency this year.
  • Foreign direct investment in the first half of 2020 fell 25 percent year-on-year, the National Statistics Office said on September 8, though the second quarter showed signs of a rebound.
  • The IMF expects GDP to decline 5 percent this year, it said in a September 15 statement. GDP declined 12.6 percent in the second quarter, compared to the same period the previous year, and 5.8 percent in the first seven months of 2020, the National Statistic Office said earlier. Government officials said the 5.5 percent decrease in July indicates the economy has begun to recover.
  • Georgia has almost doubled peach and nectarine exports this season, as of August 26, compared to last year, reported.
  • Fitch Ratings affirmed Georgia’s credit rating at “BB” with a negative outlook. “A consistent and credible policy framework has underpinned Georgia’s resilience to previous shocks,” Fitch said on August 14, but “the negative outlook reflects the significant impact of the coronavirus pandemic on Georgia’s economy. The pandemic is causing a sharp contraction of Georgia’s small open economy with a large tourism sector, a deterioration in fiscal accounts, including markedly higher public debt, and increasing risks stemming from Georgia’s higher external debt and wider structural current account deficit relative to the median of its ‘BB’ category peers.” Fitch predicts a 4.8 percent GDP contraction in 2020.


  • Production at Kazakhstan’s largest oil field, Tengiz, fell 12 percent year-on-year in the second quarter, S&P Global Platts reported on September 9, as Kazakhstan complied with OPEC+ cuts. Output dropped to 570,000 barrels per day, a decline of 100,000 b/d.
  • The National Bank forecasts a 2-2.3 percent decline in GDP this year while inflation rises to 8 percent, Tengri News reported on September 8.
  • President Kassym-Jomart Tokayev called for a 25 percent reduction in the government bureaucracy on September 1 in a speech that was largely met with a shrug. Some cheered a plan to allow citizens to tap into pension funds to buy a home or pay for medical treatments was cheered, though commentators pointed out that the amounts available are too paltry to boost the economy.
  • Foreign trade turnover fell 7.4 percent in the first half of 2020 compared to the same period of 2019, the trade minister said on August 20. Turnover with Eurasian Economic Union members fell 10 percent.
  • Since March, 15 percent of Kazakh bank borrowers have asked for repayment forbearance, Fitch Ratings estimated on August 20. That includes 34 percent of retail and 41 percent of SME borrowers.
  • Authorities will allow some international flights to resume on August 17, Tengri reported on August 12. Approved destinations include the United Arab Emirates,  Belarus, Germany, the Netherlands, Egypt, Ukraine and Russia.
  • GDP declined 2.9 percent in the first six months of 2020, the government said on August 11. At 7.1 percent, inflation was slightly below expectations.


  • Remittances grew in July year-on-year, but total transfers in the first seven months of 2020 were down $125.7 million, or 9.25 percent, reported on September 18, citing National Bank data.
  • The Bishkek mayor’s office reported a revenue shortfall of 14.6 percent in the first eight months of 2020, reported on September 15.
  • Bishkek has asked Beijing for debt relief during a visit by Chinese Foreign Minister Wang Yi on September 13. This is the second time in a month that Bishkek has made the request. As Kloop pointed out on September 14, “the Chinese reaction to Kyrgyzstan’s requests is unknown.” China owns 43.2 percent of Kyrgyzstan’s total public debt.
  • Kyrgyzstan’s foreign reserves have grown by $647 million (about 30 percent) since the start of the year, buoyed by a gold-buying spree, reported on September 14. The value of the holdings is also no doubt bolstered by the steady increase in the value of gold, which has grown about 26 percent this year. Bishkek uses the reserves to ease the gradual, yet seemingly unstoppable, slide of the som.
  • Finance Ministry officials told parliament on September 3 that the country’s national debt has reached $5 billion; of that, $4.167 billion is owned by foreigners. Of that, $1.8 billion is owed to the Export-Import Bank of China, reported on September 7.
  • Remittances to Kyrgyzstan fell 39 percent in April and May compared to the previous year, the IMF said on August 27: “The repercussions are likely to be felt widely.” In the first quarter, Russian remittances fell 20.1 percent, according to the latest Russian Central Bank data available on August 26. Remittances shot up in June following several below-average months, reported, citing unpublished National Bank figures. Most transfers originated in Russia.
  • A study overseen by the Economy Ministry expects GDP this year to fall by 10 percent, reported on August 13.


  • Debt among state-run enterprises has skyrocketed since the pandemic began, rising by almost $2 billion – roughly 30 percent – between October 2019 and July 2020, Asia-Plus reported on September 18, citing government statistics.
  • The value of Tajikistan’s agricultural exports rose 45.4 percent year-on-year in the first eight months of 2020, Asia-Plus reported on September 17, citing government statistics. The UN says the country is chronically food insecure, though prices have stabilized in recent weeks as farmers bring in the harvest. Earlier in the pandemic government price controls appeared to be worsening local supplies.
  • Tajikistan is “experiencing severe” economic effects from the pandemic, the IMF said on September 14 after a round of virtual meetings with Tajik officials. Revenues, remittances and trade have all plunged, there are shortages of foreign exchange, and state-run enterprises (such as the Talco aluminum smelter) are being opaque about their borrowing, the short statement said.
  • Dushanbe spent $115 million servicing its $3.1 billion external debt (36 percent of GDP) in the first half of 2020, Avesta reported on September 2. Authorities say they plan to attract another $1 billion in foreign loans in the next three years.
  • Pensions and wages for public-sector workers, such as doctors, will increase 15 percent on September 1, the second such raise in two years. But with inflation stubbornly high, the supplement will do little to help the many workers barely able to subsist, Radio Ozodi reported on August 29.
  • Russian remittances in the first quarter fell 22.3 percent year-on-year, according to the latest Russian Central Bank data available on August 26.
  • Dushanbe has asked Beijing for debt relief, Asia Plus reported on August 13. Tajik debts to China account for some 40 percent of the total, or $1.2 billion of $3.1 billion.
  • A year-long pandemic-induced crisis would see remittances to Central Asia fall by $3.4 billion this year, or about 24 percent, the Asian Development Bank said on August 3. Russia, the largest source of remittances for the region, is experiencing a sharp economic decline due to coronavirus as well as low oil prices. Last year, Tajikistan and Kyrgyzstan received the equivalent of about 30 percent of GDP in the form of cash transfers from laborers abroad.


  • Gurbanguly Berdymukhamedov on September 18 urged a review of the 2021 budget. “According to forecasts by leading global economic and financial experts, next year is expected to be as difficult for the economy as this one,” state media quoted the president as saying. Although he spoke only in generalities, it is evident from his remarks that more austerity is looming.
  • An Iranian official said that Turkmenistan has begun allowing a limited number of trucks to cross the border, Central Asia News reported on September 9. Ashgabat closed its borders in February as the coronavirus began to spread, causing reported food shortages at home.
  • While refusing to acknowledge its epidemiological woes, the Turkmen government is a smidge more candid on the social and economic toll of the coronavirus pandemic. Ashgabat has earmarked just over $1 billion for a five-point response plan devised in collaboration with the United Nations and largely funded by foreign donors. This plan envisions improving access to healthcare, maintaining social protection services, protecting jobs, providing stimuluses to the economy and promoting community resilience. More than half the total cash amount is reserved for macroeconomic stimulus.
  • Foreign companies operating in Turkmenistan are evacuating employees on charter flights, we reported on August 25. The government still denies the pandemic has reached the country.
  • State employees in the Lebap province, including workers at state-owned factories and teachers, have been sent on unpaid leave for three months, Central Asia Media reported on August 6.
  • The pandemic is forcing the government to put its long-term industrial plans on hold. The most notable among these being the trans-Afghan TAPI natural gas pipeline. This much was admitted on July 27, during a video-conference meeting of representatives from project participant nations. One conclusion reached during that exchange was that work would be “activated” once the pandemic is over. Since Turkmenistan is so mysterious about its own health crisis, however, it is difficult to understand how anybody will know when and if that has happened.


  • The country exported $5.8 billion of gold in the first eight months of this year, the State Statistics Committee revealed on September 21 . That accounted for half of exports-based revenue. Just to put that in context, Uzbekistan exported $4.9 billion worth of gold over the whole of 2019. The 147 percent increase in the value of gold exports year-on-year was driven in part by the precious metal’s steadily increasing price on world markets. But Uzbekistan’s overall trade turnover fell 12.7 percent in the same period. Its top three trade partners are China, Russia and Kazakhstan; the deficit with each grew slightly on the year.
  • Uzbekistan must continue to reform its financial sector, the IMF said on September 21, despite the pandemic. “The crisis should not delay the reform of the state — owned banks and state-owned enterprises—including by improving their governance — and the agricultural sector. As the crisis abates, the authorities should also continue with reducing the role of the state in the economy.”
  • Inflation has fallen to its lowest level in three years, reported on September 18, citing government statistics. In the first eight months of 2020, inflation amounted to 4.8 percent, compared to 8.2 percent in the same period of 2019. Annualized inflation fell from 16.5 percent last year to 11.7 percent in August. Though demand for food and a weak sum added pressure to prices earlier in the year, the decline in economic activity has pushed down the overall inflation rate.
  • Total external debt grew 10.5 percent in the first six months of 2020, to $17.3 billion or 30.3 percent of GDP, according to Finance Ministry figures published by Central Asia Media on September 15.
  • Remittances from abroad fell by $209 million, or 5.4 percent, in the first eight months of 2020 compared to the same period the year before, reported on September 14, citing the Central Bank. The largest dip was in March and April. Russian remittances in the first quarter fell 7.2 percent year-on-year, according to Russian Central Bank data.
  • The Central Bank expects a slow recovery due to low income growth and the population’s “cautious behavior,” reported on September 10.
  • Central Bank Deputy Chairman Behzod Khamroev said on September 7 that inflation in the first half of 2020 averaged 11.6 percent, a decline from 15.2 percent in 2019, reported. Authorities are targeting a rate of 5 percent by 2023.
  • The government revised downward its 2020 growth forecast to 2.2 percent from 5.5 percent as it passed a broad “action plan” on September 3 that hopes to return growth next year to 5-5.5 percent. The Asian Development Bank predicts GDP to slow to 0.5 percent.
  • Inflation in the year to August 2020 hit 11.7 percent, the state statistics committee said on September 1.
  • Lukoil says it is operating its Uzbek gas production infrastructure at 20 percent capacity, due to the decline in purchases from China, Uzdaily reported on August 30.
  • Finance Minister Timur Ishmetov told parliament on August 26 that external debt grew by 10.9 percent, or $17.3 billion, in the first half of 2020. In May the IMF said that the country’s debt to GDP ratio rose from 34 percent to 44 percent in the year to 2019.


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