Full Report - Subregional Office for East and North-East Asia - escap

ECONOMIC AND SOCIAL SURVEY OF ASIA AND THE PACIFIC 2013
by a shrinking economically active population.
Nevertheless, domestic demand started to weaken
in late 2012, which weighed on the economic
performance of neighbouring economies through
reduced outflows of remittances. The performance
of the economy of the Russian Federation has a
large impact on other economies in the subregion
through trade, investment and remittances channels.
The economy of Tajikistan expanded at a slightly
more rapid rate of 7.5% in 2012 compared with
7.4% in 2011. A sharp rise in remittances and
industrial expansion helped to prop up the economy
amid external challenges. The agricultural sector,
which accounts for two-thirds of total employment
and one-third of GDP, also expanded strongly as it
was unaffected by a regional drought that heavily
damaged grain harvests in neighbouring countries.
The performance of the economy of
the Russian Federation has a large
impact on other economies in the
subregion through trade, investment
and remittances channels
Turkmenistan recorded another year of a double-digit
growth, at 11.1% in 2012, compared with 14.7% in
2011. This still-robust growth amid weak external
conditions was driven by strong hydrocarbon exports,
especially gas exports to China, strong private
consumption and public spending. Investment to
enhance hydrocarbon capacity and production as
well as new pipeline projects also further supported
economic growth.
In Uzbekistan, GDP growth remained strong at 8.1%
in 2012 but it was slightly lower than the 8.3%
growth rate recorded in 2011. Growth in 2012 was
driven mainly by the services sector. The economy
was also assisted by rising investment through the
Government’s ongoing industrial modernization and
infrastructure development programme for the period
2011-2015. Furthermore, unlike in other economies
in the subregion, favourable weather conditions and
abundant availability of water lifted the agricultural
outputs of Uzbekistan. The recent increases in public
sector wages and social payments also helped to
sustain private consumption.
Inflation eases during the first half of
2012 but subsequently picks up
In most countries in North and Central Asia, there
was a slowdown in inflation during the first half
of 2012 but it picked up during the remainder
of the year due to rising food prices caused by
severe weather conditions in some countries in
the subregion. For the year as a whole, inflation
declined in all countries except Uzbekistan (see figure
2.4). Armenia, Azerbaijan, Georgia and Kyrgyzstan
saw a sharp fall in the rates of inflation in 2012.
In Armenia, agricultural recovery, moderating global
commodity prices and appropriate monetary policy
responses acted to contain consumer price inflation
in 2012. Azerbaijan experienced inflation easing to
1.8% in 2012 from 8.1% in 2011, despite the fact
that planned salary increases boosted domestic
demand. Georgia saw weak deflation throughout
2012 as food prices continued to contract from
the high base of the previous year. In Kyrgyzstan,
inflation fell dramatically from 16.9% in 2011 to
2.8% in 2012, punctuated by a sharp contraction
in economic activities, coupled with a slower pace
of global food and fuel price increases.
In Kazakhstan, the Russian Federation, Tajikistan
and Turkmenistan, rates of inflation slowed relative
to the pace observed in 2011, although prices
remained high. In Kazakhstan, food prices followed
a declining trend during the first half of the year
until they started rising again in mid-2012. In the
Russian Federation, inflation exceeded the target
rate of 5-6% in the second half of 2012, driven by
services, fuel and food prices. However, inflation for
the whole year was 5.1%, compared with 8.4% in
2011. In Tajikistan, inflation dropped to 5.8% in 2012,
but high price pressures returned towards the end of
the year. A regional drought pushed up significantly
the cost of food imports; food costs account for
about 70% of Tajikistan’s consumer goods basket.
Increased import duties on oil products, hikes in the
electricity tariff and a sharp rise in the minimum
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