KAZAKH EXPORT GROWTH SLOWS SHARPLY IN 2001.

Export growth in Kazakhstan has slowed sharply this year after last year’s extraordinary 63.4 percent surge in exports. In the first half of 2001, exports were up just 6 percent to US$4.46 billion. The slowdown in export growth this year is due to both supply and price effects. First, after a stellar 2000, rapid output growth in aluminum, steel, copper and lead has ended. Aluminum of Kazakhstan, Kazakhstan’s alumina and bauxite producer, cut production of alumina, an intermediate input into aluminum, by 2.4 percent in the first seven months of 2001. Raw steel production fell 4 percent in the same period and Kazakhmys Corporation, Kazakhstan’s biggest copper producer, produced only 3.6 percent more copper in the first half of 2001 than during the same period last year. Lead output fell 19 percent. Producers are hitting capacity constraints or have cut back output from marginal mines or smelters as labor and other costs have risen.

In addition, world market prices are not as attractive this year as last. World copper prices have fallen from US$1,700 a ton in July 2000 to US$1,469 in July 2001. Prices for aluminum and other nonferrous metals have slid, as have prices of grain, another important export. Oil prices have experienced no growth. However, in contrast to nonferrous metal exports, exports of oil and gas condensate rose 21 percent to 16.46 million tons in the first half of 2001. Moreover, although oil prices have not risen sharply, neither have they fallen. In dollar terms, exports of oil and gas condensate hit US$2.267 million in the first half, 19 percent more than in 2000. On a net basis, exports of oil and gas account for all of Kazakhstan’s export growth this year.

Kazakhstan is also benefiting from the rapid economic growth in the CIS. The share of Kazakh exports going to the CIS rose to 31 percent in the first half of this year compared to 28.3 percent in the first half of 2000. Two-thirds of these exports, many of them commodities, go to Russia. Because of the way transport links were constructed during Soviet times, rail, road and pipelines connections in a number of Kazakh regions are better with the surrounding states than with the rest of the country. As a consequence, output from a number of coal mines, natural gas fields and oil wells is exported to Russia rather than consumed domestically. By the same token, regions such as Almaty have to rely on imported gas and oil rather than domestic production because of the pattern of supply links. Not surprisingly, 56 percent of Kazakh imports come from the CIS.

While export growth has moderated this year, imports are up sharply. They rose by 46 percent to US$3.2 billion in the first half. In contrast to exports, imports have risen about as fast from the Far Abroad as from the CIS. Because of the sharp increase in imports, Kazakhstan’s trade surplus fell 37.4 percent to US$1.26 billion in the first half of 2001. The jump in imports reflects surging domestic demand.

FIRST-HALF ROUNDUP FOR FERGHANA VALLEY ECONOMIES.