Kazakh trade with EEU continuing shrinking in Jan-Sep

By bne IntelliNews November 13, 2015

Kazakhstan’s trade with Russia, Belarus, Kyrgyzstan and Armenia, the fellow members of the Eurasian Economic Union (EEU), dropped by 25.8% in January-September, the State Statistics Committee has announced.

The data shows the downward trend that started in 2014 is continuing apace. Last year, Kazakhstan's trade with Russia and Belarus shrank by 20.1% y/y, while in the first quarter of this year the trade declined by 20.9% y/y. In the first half of the year, the trade decreased by 21% y/y and by 23.1% y/y in the first eight months of the year.

The main reason for the decline was a decrease in exports – by 29.2% y/y to $3.8bn in the first nine months of the year. Imports also shrank but to a lesser extent – by 24.1% y/y to $8.3bn.

The EEU was launched in 2015 on the basis of the Customs Union that was created in 2010. At present, Kazakhstan, Russia, Belarus and Armenia are member states. Kyrgyzstan joined the free-trade bloc in August.

Kazakhstan’s exports remain dominated by mineral products (47.4%), which were followed by chemical products (18.5%), metal and metal products (16.8%) and food products (7.7%). On the other hand, Kazakhstan's imports were mainly machinery and equipment (29.8%), mineral products (14.8%), metal and metal products (14.5%), chemical products (14.4%) and food products (13%).

As foreign trade is calculated in dollars, its decline is partially connected to the depreciation of the Russian ruble. The cheaper ruble prompted Kazakhstan to impose barriers to limit imports of Russian products in order to protect local producers. Adoption of the free-floating exchange rate of the tenge on August 20 also helped cut imports.

Kazakhstan’s foreign trade within the EEU is dominated by trade with Russia which reflects the legacy of Soviet-era links. Kazakhstan’s exports to Russia shrank by 30.5% y/y to $3.4bn, while imports decreased by 23.3% y/y to $7.8bn. Exports to Belarus went down by 14.4% y/y to $40.9mn and imports declined by 30.6% y/y to $362mn.

Trade between Kazakhstan and Armenia is insignificant in monetary terms because of geographical distance and lack of production base in this country. In January-September exports to Armenia stood at $0.6mn while imports reached $2.9mn.

Kyrgyzstan appears to be the second largest trade partner for Kazakhstan within the EEU. This is a result of the opening the border between the countries following Kyrgyzstan's joining to the EEU and geographical proximity. In January-September, Kazakhstan exported goods worth $419mn to this country (a drop of 17.7% y/y) and imported goods worth $156mn (a decrease of 42.4% y/y). Imports from Kyrgyzstan decreased due to the weakening of the tenge which undermines attractiveness of Kyrgyz products to Kazakhs. At the same time, according to media reports Kazakhstan has imposed non-tariffs barriers that make it difficult to import Kyrgyz products.

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