North and Central Asia: Overview and Recent Trends. Tiziana Bonapace Head Subregional Office for North and Central Asia, ESCAP
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1 North and Central Asia: Overview and Recent Trends Tiziana Bonapace Head Subregional Office for North and Central Asia, ESCAP
2 North and Central Asia: An Idiosyncratic Setting High economic volatility After 1991 dramatic economic depression and disintegration, 2000 up to 2008 sharp rebound 2008 to 2016 recessionary environment exacerbated by geopolitics and low oil prices
3 Recent Trends in Oil Prices 120 Average monthly prices ( ) Indexed monthly prices Jun Notes: Source: Monthly Brent Spot Prices indexed with the average monthly prices between 2011 and 2013 EIA based on Thomson Reuters
4 ESCAP: Real GDP Growth [% change per annum] South and South-West Asia South-East Asia East and North-East Asia Pacific North and Central Asia
5 ESCAP: Inflation Rate [% change per annum] North and Central Asia South and South-West Asia South-East Asia Pacific East and North-East Asia
6 NCA: Real GDP Growth [% change per annum] Armenia Azerbaijan Georgia Kazakhstan Kyrgyzstan Russian Federation Tajikistan Turkmenistan Uzbekistan
7 NCA: Inflation Rate [% change per annum] Armenia Azerbaijan Georgia Kazakhstan Kyrgyzstan Russian Federation Tajikistan Turkmenistan Uzbekistan
8 North and Central Asia: An Idiosyncratic Setting Among the smallest in economic size The NCA subregion (excluding Russian Federation) but accounts for only 1% of ESCAP s regional GDP (see figures below)
9 ESCAP & NCA: GDP Tajikistan 2% Turkmenistan 15% 6% 15% 8% 64% 6% 1% Kyrgyzstan East and North-East Asia 2% Pacific South and South-West Asia South-East Asia Russian Federation North and Central Asia except Russian Federation 0 Kazakhstan 45% Uzbekistan 13% Armenia 3% Azerbaijan 16% Georgia 5%
10 North and Central Asia: An Idiosyncratic Setting Landlocked countries with high geo-economic potential, but beset by geo-political destabilization At the crossroads of a vast Eurasian landmass that links the largest trading areas of the world, Attracted the interest of every large country (each with a specific national agenda). Geographically contiguous to the most conflict ridden and unstable area of the world
11 SONCA Geographical Coverage Member States Armenia, Azerbaijan, Georgia, Kazakhstan, Kyrgyzstan, the Russian Federation, Tajikistan, Turkmenistan and Uzbekistan
12 North and Central Asia: An Idiosyncratic Setting Economies in transition High variance in economic performance among countries Those that were laggard at independence remained so, and those that were faster growing grew faster Determined by natural resource endowments How long will transition last?
13 Harbingers of Change: Huge investments in infrastructure 2. Ease of doing business: significant improvements in cross-border trade 3. Services sector, including information and communications technology
14 1. Infrastructure connectivity is critical for landlocked developing countries Geography adds dramatically to the problems faced by LLDCs Historically most important demand of LLDCs has been free access to the sea Infrastructure connectivity is critical for LLDCs APoA ( ) Draft programme of action ( ) LLDC problems high priority for ESCAP ECAFE 1956 first international forum to recognize LLDC needs Today, ESCAP work well aligned with evolving programme of action
15 Land Infrastructure: Alternate Routes Chongquing Duisburg Time comparison,
16 Land Infrastructure: Alternate Routes The New Silk Economic Belt Source: CCTV reproduced in Wong (2015).
17 Land Infrastructure: Alternate Routes The New Silk Road Railway Source: Xinhua News Agency.
18 1. Significant progress but infrastructure connectivity is unfinished business LLDCs have performed relatively well over past decade For example, ESCAP calculations show that 62% of LLDC populations are within 25 km of ICT infrastructure, as compared to 59% for population of the entire ESCAP region Similarly, the World Bank 2014 Survey of Logistics Professionals show relative improvement in the quality of trade and transport infrastructure
19 1. Significant progress but infrastructure connectivity is unfinished business LLDCs that committed large-scale investments in infrastructure and prioritization in national agendas services did best Also marked qualitative improvements in awareness of policy makers and partnerships with transit countries for mutual benefits in well managed transit arrangements Landlockedness not inevitable destiny Long term, multi-stakeholders efforts, and political commitment required to close gaps
20 2. NCA in Doing Business 2015 DB Overall Ranking DB Trading Across Borders LPI Armenia Azerbaijan Georgia Kazakhstan Kyrgyz Rep Tajikistan Turkmenistan n.a. n.a. n.a. n.a. 140 Uzbekistan Notes: the Doing Business rankings cover 189 countries benchmarked to June 2014 and June 2015; the LPI covered 160 countries in 2014; Turkmenistan is not ranked in Doing Business. Source: World Bank Doing Business and LPI
21 3. Services Sector Growth: Next Frontier of Growth for NCA 80% 60% 40% 20% 40% 60% 80% World Europe North America Pacific North East Asia North and Central Asia South and South - West Asia South - East Asia Horizontal axis Services Sector % of GDP Vertical axis Services Sector % of Employment Size of Bubble GDP per capita
22 3. NCA Services Sector Commitments Percentage of Free Sectors in Commitments under GATS Country name Percentage of free sectors Kazakhstan 24.8 Russian Federation 27.7 Tajikistan 37.2 Armenia 39.9 Georgia 46.5 Kyzrgyz Republic 49.3 Source: WTO
23 3. Unfinished business: ICT connectivity ESCAP analysis shows Asian LLDCs face higher connectivity prices, due to transit fees applied by transit countries (at least 20%, sometimes far more) ESCAP has identified a number of high priority investments in terrestrial fibre optic cables to diversify routes and enhance market competitiveness Even this is not enough: regional approach for meshed networks will enhance role of LLDCs in data transit
24 3. Unfinished business: ICT connectivity Rationale of Asia-Pacific information superhighway: leveraging on cross-border rights of ways of Asian Highway and Trans-Asian Railway and cross-sectoral infrastructure synergies Cost reductions and revenue enhancing opportunities: dig once use many times principle ESCAP countries recently agreed to consider amending, AH, TAR Agreements in a joint session of the ICT and Transport Committees
25 3. Unfinished business: energy grids ESCAP estimates that demand for energy will double by 2050 in ALLDCs, most of which will be for electricity Imbalances in demand and supply for energy in ESCAP region, but ultra-high voltage technology now facilitates electricity transport over long distances Bilateral and subregional energy exchange initiatives being promoted in the region ESCAP promoting Asian Energy Highway concept, foster cooperation to build connections across energy networks, establish integrated market mechanisms
26 4. Connecting Asian LLDCs the way forward Continued key role by international and regional financial institutions New injection of funds through creation of new institutions New configurations of multilateral cooperation focused on plurilateral and multipolar relations: in this evolving configuration, regional cooperation emerges as a centrepiece for connecting LLDCs UN Regional Commissions can play an important supportive role in coordinating pan-regional initiatives
27 Thank you For further information contact Research assistance provided by Giampiero De Feo
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