From the EBRD, September 27:
EBRD forecasts strong economic performance in Central Asia
- Growth in the Central Asia in 2023 revised up to 5.7 per cent
- Growth in 2024 will continue at 5.9 per cent
- International trade, China’s reopening and government spending among key factors
The economies of Central Asia demonstrated strong growth in the first half of 2023, bolstered by a resumption of international trade and tourism, as well as high levels of migration and remittances from Russia, according to the European Bank for Reconstruction and Development’s (EBRD) latest Regional Economic Prospects (REP) report, published today. According to the Bank, GDP growth in the region is likely to remain robust at 5.7 per cent in 2023 and 5.9 per cent in 2024.
The recent bout of growth – driven by government spending, China’s reopening, intermediated trade with Russia, as well as remittances, tourism and business relocation from Russia – is likely to continue. The REP notes, however, that higher borrowing costs may affect the scale and appetite for investment in the region. At the same time, recent water and energy supply disruptions may prompt long-overdue tariff reforms, as well as better resource management.
The economy of Kazakhstan is set to grow by 5.0 per cent in both 2023 and 2024, though with some uncertainty arising from oil prices. The country has seen significant expansion in sectors such as retail and wholesale trade and construction. There has also been a pick-up in public and private investment in infrastructure, transport and warehousing, reflecting Almaty’s growing role as a distribution hub serving Central Asian markets. The ongoing war on Ukraine, however, may have a negative impact on the operation of the Caspian Pipeline Consortium terminal on the Black Sea, potentially disrupting Kazakhstan’s oil exports.
The GDP of the Kyrgyz Republic is expected to grow 4.6 per cent in 2023 and 7 per cent in 2024. The country’s economic growth slowed to 2.9 per cent year on year in the first seven months of 2023 due to a contraction in metals output (mostly gold) and the agricultural sector. At the same time, the domestic textiles sector boomed thanks to strong external demand. There was also significant expansion in tourism, triggering growth in food production, hospitality, and retail and wholesale trade. The REP warns Kyrgyzstan’s outlook could be worsened by energy and water shortages as well as secondary sanctions related to Kyrgyzstan’s outsized role in intermediated trade with Russia.
Mongolia’s economy is likely to grow by 7.2 per cent in 2023 and 7.5 per cent in 2024, driven by China’s demand for the country’s commodities, the launch of new rail lines connecting the Tavan Tolgoi coal deposits with China, and the start of underground production at the Oyu Tolgoi mine. The tourism sector has recovered fully and is helping to improve performance of the hospitality and cashmere industries. Stronger growth in exports, mining and tourism may strengthen the outlook; the tightening of global credit conditions and a slowdown in China are the main downside risks....
....MORE
Unless you have someone on the ground that is both trustworthy and experienced, the safest bet for portfolio investments is usually something as boring as buying the country's leading publicly-held banks. You get exposure plus a bit of diversification (depending on the loan book).
But safest does not mean safe.
Previously:
August 2021
With The Return Of The Taliban The Long - Anticipated Kabul Stock Exchange May Be Delayed
With the outro:
That was followed five months later by the Bloody January unrest/coup attempt in Kazakhstan:And for punters jonesing for frontier market action. the Kazakhstan Stock Exchange in Almaty may offer some bargains with the KASE Index down 11% from its June high. And fairly resilient in the face of the geopolitics of the region.Finally another option is Kyrgyzstan but before getting your bets down read:
Hunter Biden's Excellent Kazakhstan Adventure
Yesterday's mention of Hunter Biden wasn't a throwaway line. It was triggered by a photo in one of the links we wrapped in ""Food and cash shortages spread as Kazakhstan throttles internet" + Russians To Evacuate Citizens Form Almaty":Also at Eurasianet:Kazakhstan: Ex-security services chief and Nazarbayev ally arrested Masimov faces charges of treason.
But, you go where you gotta go to get what you gotta get:
"In His First Trip Abroad Since The Start Of The Pandemic, China's Xi Will Visit Producer Of Half The World's Uranium"
Priorities. The Xi-man is not playing around....
Dimensional
Fund Advisors Shows How to Bet on Emerging Markets When You're Honest
And Admit You Don't Really Know What's Going to Happen
This looks very, very smart.
The approach seems to solve one of the major portfolio construction
problems in Emerging/Frontier investing: if you try to control risk by
buying market cap you end up owning all the banks and not much else....
