It’s tough to find good economic news coming out of Central Asia these days. But for those yearning for some, a recent report issued by the German financial giant Commerzbank seems to want to turn back the clock to the dreamy days of booming growth and soaring commodity prices.
The bank’s recently released 36-page report, titled Insights: Central Asia and Mongolia, touts numerous investment opportunities in the region.
“We view the trend for the Central Asian region and Mongolia as positive, owing to the diverse opportunities, and will be pleased if our work helps to make a positive mark and send out a positive signal to politics and business,” the report states.
Axel Bommersheim, one of the bank’s regional heads, goes so far as to predict in a press statement that “future economic growth in the region will be considerably higher than the global average.”
Production schedules make it understandable why the report may be a few steps behind in tracking the decline of Central Asian economies. Still, the report seems to gloss over multiple factors that aren’t exactly new, and which are stalling Central Asian economies – including sagging oil prices and the cratering Russian economy. Ultimately, the report comes across as more wishful thinking than forecasting. The projections in the Commerzbank report aren’t in line with forecasts made by the World Bank or EBRD.
Hurting the report’s credibility is a statement that Mongolians achieved their independence in “1991.” The joke may have been that Mongolia was little more than the 16th Soviet republic, but in actuality the country gained independence in the early 20th century.
The questionable forecasts aren’t difficult to spot in the report. In its section on Kazakhstan’s fiscal health, for instance, Commerzbank claims that “Kazakhstani state finances are currently in good shape,” and that Kazakhstan “is the only country in Central Asia to possess an investment grade rating with the three big rating agencies.” The report, however, came out just a few days after Kazakhstan dropped its projected economic growth to 1.5 percent, its lowest rate since 2009, and announced that its projected industrial output would come at the lowest rate in nearly two decades. Likewise, Standard & Poor’s recently cut Kazakhstan’s credit outlook to the second-lowest investment grade, with a negative outlook alongside.
That’s not all: there’s little on the Eurasian Economic Union’s potential adverse impact on the economies of Kazakhstan and Kyrgyzstan, or on the fact that migrant remittances are experiencing a considerable drop across the region. In fact, one of the few mentions of migrant remittances in the report makes a strange claim that “weak economic development in Russia” will allow Tajik migrants “to transfer large sums to their families.” How the slowdown in Russia would enable migrant laborers to transfer “large sums” to their families, the bank report did not explain.
Fortunately, the bank includes a disclaimer in the report: “Commerzbank assumes no responsibility, however, for the truthfulness and/or accuracy of this data.”