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Russian Business Relocations Boost Central Asian Economies

Kazakhstan as an example of where Russian capital, HR and investments are flowing

A report by the European Bank for Reconstruction and Development (EBRD) has stated that the economies of Central Asia will experience the most rapid growth over the coming two years than any other regions where the EBRD has a presence. Headquartered in London, the EDRB has a significant presence in Eastern Europe.

The bank notes that during 2023 and 2024, Central Asian economies will grow by an average of 4.9% and 5.4%, and notes that the acceleration of growth in the economies of Central Asia is associated with an influx of investment in infrastructure, high energy prices and the relocation of Russian business.

Among the key factors influencing growth are high oil and gas prices for commodity exporters, increased labour, capital, and remittance inflows, as well as increased trade through intermediaries. According to the banks analysts, real GDP will grow the most among the Central Asian states in Tajikistan (8%), Kyrgyzstan and Mongolia (7% each), Turkmenistan and Uzbekistan (6.5% each). In Kazakhstan it will be 3.5%.

The EDRB also noted that in Kyrgyzstan, Kazakhstan and Uzbekistan, and Transcaucasia (Armenia and Georgia) during September-October 2022, an increase in real wages was recorded in comparison with other countries of the EBRD presence. This is underpinned by growing exports and imports, investment flows and the arrival of educated migrants from Russia, as well as high energy prices.

Exports from the European Union, Great Britain and the United States to Central Asia and the Caucasus have increased dramatically, indicated by the growth of intermediary trade: goods are exported to Central Asian countries and then resold to Russia.

According to the EBRD, in Armenia and Kyrgyzstan, such trade amounted to 4-6% of their respective GDP, leading to the growth of their domestic logistics industry, which in turn supports the exchange rate of the local currency against the dollar.

The Kazakhstan Examples

Russia Kazakhstan trade moved upwards in 2022
Supporting this data are the latest trends in Russia-Kazakh trade, which underwent unprecedented shifts during 2022, leading to changes in trade behaviour that have not largely been appreciated in the West. In the EU especially, values have tended to be placed upon the Russian economy measured solely against European impact and discounting the Asian aspect. During the past year, over 11,000 sanctions have been imposed on Russia. But, as a result of the restrictions imposed on the country, the demand for goods from Kazakhstan has increased in Russia. Both countries are members of the Eurasian Economic Union (EAEU) which encouraged free trade between members meaning such developments are relatively simple to understand.

source: russia-briefing



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