Kazakhstan: Another Year, More Misery From Eurasian Union
The major devaluation of its national currency notwithstanding, Kazakhstan reported a 23.5 percent drop in trade with its partners in the Moscow-led Eurasian Economic Union in 2016, compared to the year before.
Finprom.kz reported gloomily on March 28 that despite efforts by Kazakhstani producers to slash prices for their goods, the overall value of exports is falling, and falling hard.
The situation is an altogether paradoxical one.
In 2016, the price for finished goods exported within the EEU were 1 percent lower than the year before — the price for raw goods was 8 percent down. Only the cost of semi-finished products was up by 2.8 percent. So in total, Kazakhstan exported $3.9 billion worth of goods to its EEU partners.
Over that same period, the price of goods imported from EEU nations rose across all categories: raw goods by 14.7 percent, semi-finished products by 9.5 percent and finished goods by 14 percent. But overall imports fell by 13.7 percent to $9.7 billion, which still represents a hefty trade imbalance.
Reducing the cost of exports was made possible by the weakening of the national currency, the tenge, which has been in a free-float since August 2015. Proponents of devaluation had argued that the the policy would be a boon to Kazakhstan’s producers and, conversely, dampen demand for cheap imports, particularly from Russia.
Kazakhstan’s government is now turning its attention to what it is grandly dubbing its “Third Modernization,” which implies the prioritization of developing the non-raw material sector. The aim is to double the export of non-raw goods by 2025.
Before then, the EEU may not be bringing much joy to Astana.