Steps toward Cooperation
Kamiljon Akramov, Jarilkasin Ilyasov, and Allen Park
After experiencing significant negative external shocks beginning in late 2014, the Central Asian countries—Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan, and Uzbekistan—began to enjoy more favorable external economic conditions in late 2016. Improvements include considerable increases in nonrenewable commodity prices and economic recovery in the region’s key trading partners, including resumption of growth in Russia, a key driver of remittance flows and trade for Central Asian economies. These favorable external factors increase economic activity and food security in Central Asia through their impact on export earnings, remittance flows, and investments from the region’s main economic partners.
The significant upturns in energy and metals prices supported economic recovery and appreciation of the Russian ruble in 2017, which in turn increased remittance flows to Kyrgyzstan, Tajikistan, and Uzbekistan. The combination of rebounding demand for migrant labor and a stronger ruble led to a 34 percent increase in remittance flows in nominal US dollar terms from Russia to Uzbekistan in the first half of 2017, compared to the same period in 2016. Remittance flows to Kyrgyzstan and Tajikistan increased by 28 percent and 22.4 percent, respectively, during the same period. Depreciation of the national currencies of Tajikistan and Uzbekistan led to even greater increases in remittances when accounted in the national currencies of these countries. For example, Tajikistan’s somoni depreciated by almost 12 percent against the US dollar during the first three quarters of 2017.
Income from employment and remittances remain the primary drivers of poverty reduction and improved food security in the region. Increasing remittance inflows, while still well below 2012–2014 levels for Tajikistan and Uzbekistan, in combination with low inflation boosted the real purchasing power of households. Relatively stable food prices also contributed to the food security of poorer households. Thus poverty and undernourishment rates continued to decline. However, micronutrient deficiencies—that is, the lack of essential vitamins and minerals—remain common. In addition, overnourishment (overweight and obesity) is on the rise in all countries of the region. For instance, the overweight rate in Kyrgyzstan increased by more than 10 percentage points during the last decade and about 45 percent of adults were overweight in 2015.