Freedom Finance Global's latest report on consumer confidence, inflation, and devaluation expectations in Central Asian countries for January 2024 reveals continued positive trends across the region. Despite potential seasonal fluctuations following the New Year holidays, consumer confidence has shown resilience, with improvements recorded in three out of four countries: Kazakhstan, Uzbekistan, and Kyrgyzstan. This trend underscores a growing optimism among residents, although concerns over inflation and economic stability persist.
Kazakhstan
In January, the Consumer Confidence Index (CCI) in Kazakhstan experienced a decline of one and a half points, marking the second consecutive month of decrease. Despite this, the index stands at 103.2 points, showing an increase of 3.4 points compared to January 2023, primarily driven by heightened optimism regarding short-term economic prospects. However, all five subindices contributing to the final result exhibited monthly declines, with the subindices related to personal financial situations and one-year economic expectations experiencing the most significant drops.
There has been a slight worsening of the financial situation, reflected in the 2-point decrease in the subindex measuring changes in personal financial situations over the past year. In January, 31.6% of Kazakhstanis perceived an improvement in their personal finances, down from 37.9% in November. This trend persists across age groups, with younger respondents expressing more positivity compared to older demographics. Regionally, western areas continue to lead in positive responses, particularly the Mangistau region, which saw a significant increase in optimism.
Expectations for future improvements in personal financial situations also decreased by 2 points in January, with 51.6% of respondents anticipating improvement, down from 53% in December. The most optimistic responses were observed in the Mangistau region.
Furthermore, short-term economic prospects saw a decline of 1.6 points, although overall expectations remain relatively high compared to previous months. Despite an increase in positive responses regarding economic prospects for the coming year, the decline in the subindex was driven by a rise in negative responses. Younger respondents showed a decrease in optimism compared to older age groups.
Inflationary sentiments among Kazakhstanis reached record lows in January, with fewer individuals noticing price increases compared to previous months. Expectations for future price rises also decreased, aligning with data from the National Bank of the Republic of Kazakhstan.
Concerns over rising prices primarily focused on essential food items such as meat, dairy products, and bread. Additionally, devaluation expectations decreased to a seven-month low, likely influenced by the strengthening of the tenge against the dollar.
While the credit confidence index experienced a slight decline, overall stability was maintained, with an increase in trust in bank deposits. However, the level of calm decreased slightly in January, though it remains higher compared to September 2023. Expectations for unemployment growth also saw a slight decrease compared to the previous month.
Uzbekistan
The Consumer Confidence Index among Uzbekistan citizens saw a further increase, reaching a record high of 136.9 points, reflecting a 1.6-point uptick. This rise was predominantly driven by enhanced economic forecasts and assessments within the country. However, there was a noticeable decline in favorable conditions for significant purchases.
The subindex measuring evaluations of the economy's performance over the past 12 months exhibited significant growth, reaching a new high of 135.1 points. 60.1% of respondents perceived an improvement in Uzbekistan's economic situation, up from 55.1% in December. Younger demographics expressed more pessimism about the economy compared to older age groups.
Regionally, the Khorezm and Surkhandarya regions led the way with regional indices of 147.3–147.4 points, where 68–71% of residents viewed the economy positively. These areas also demonstrated substantial progress compared to December. Conversely, Tashkent remained at the bottom of the rankings.
Expectations regarding changes in the economic situation over the next 12 months also saw a significant increase, with the subindex climbing by 3.5 points to 162.4 points, another record high. The proportion of respondents anticipating economic improvement rose from 69% to 71.6%, with increases observed in middle-aged demographics. However, younger respondents remained less optimistic compared to other age groups.
The subindex reflecting the favorability of conditions for purchases experienced a decline of 2.6 points, hitting a seven-month low of 84.1 points. Only 40.4% of Uzbek citizens viewed the current time as favorable for large purchases, with a notable increase in those expressing negative views.
Short-term inflation expectations and assessments decreased sharply over the one-month horizon, with fewer respondents noticing price increases. However, expectations for inflation over the next year increased slightly. Official data showed a decrease in monthly inflation rates, with certain food items like meat and flour being of particular concern to Uzbek citizens.
Confidence in loans experienced a sharp increase in January, reaching new record levels, with more individuals considering it a good time to take out loans. Similarly, confidence in deposits also rose significantly. The level of calm among respondents showed significant recovery, reaching a new high. However, there was a slight increase in the proportion of respondents expecting unemployment to rise in the coming year.
Kyrgyzstan
Kyrgyzstan witnessed an increase of 2.9 points, propelling the Consumer Confidence Index to a record high of 133 points. Following a minor dip in December, this surge was largely propelled by enhanced appraisals of the present circumstances. Growth was observed in the subindices concerning changes in personal financial situations and the favorability of substantial purchases and expenditures, rising by 6.2 and 5.2 points, respectively. Furthermore, assessments regarding changes in the economy over the past year also experienced noticeable improvement.
The proportion of respondents expressing positivity regarding changes in their personal financial situations witnessed a sharp increase, climbing from 46.8% to 50.7%. This surge was predominantly driven by the youth demographic, with those under 29 years of age leading the positivity trend. Additionally, rural areas emerged as the focal point of this improvement, with 55% of villagers reporting financial enhancements.
The sub-index gauging the favorability of current conditions for purchases and expenses saw an increase of 5.2 points. While the percentage of Kyrgyzstanis giving positive responses remained relatively stable, a notable shift was observed in the decrease of negative responses, from 45.3% to 41.2%. Younger individuals and the 45–59 age group showed improvements in their perspectives, with young adults under 29 taking the lead.
Assessments of changes in the economy also saw a positive upturn, with 58.3% of residents perceiving an improvement over the past 12 months. Once again, the 45–59 age group played a significant role in driving this growth, although the oldest demographic remained the most positive. However, the youngest age group saw a slight decrease in positive responses.
Inflation estimates and expectations continued to decline, reaching new lows for the entire study period. Both short-term and one-year inflation expectations decreased, with Kyrgyzstanis expressing the lowest inflation concerns among Central Asian countries. Estimates of price growth also declined, with a decrease in perceptions of price acceleration over the past 12 months.
Devaluation expectations in Kyrgyzstan showed a slight increase, with fewer residents expecting a weakening of the som against the dollar over the next year. However, expectations regarding short-term dollar growth decreased, reaching the lowest level during the study period.
Credit confidence remained stable, while deposit confidence experienced a moderate decline. The overall level of calmness among the population continued to increase for the sixth consecutive month. Furthermore, expectations for an increase in unemployment decreased, reaching a new low, with fewer residents anticipating a rise in joblessness.
Tajikistan
The consumer confidence index in Tajikistan experienced a slight uptick from 148.6 to 149.6 points in January, following a minor dip in December. Despite maintaining its position as the highest in Central Asia, Tajikistan witnessed varying trends among individual components of consumer confidence. Consequently, the country relinquished its lead in the subindex concerning the favorability of current conditions for purchases. Nevertheless, two out of the five sub-indices exhibited noteworthy growth, surpassing previous records. These were expectations regarding personal financial situations and the economy over a one-year horizon.
Expectations regarding personal financial situations reached an all-time high, with the subindex experiencing a surge of 6.2 points, reaching 163.2 points, marking an unprecedented milestone in the region. The proportion of individuals anticipating an improvement in their financial circumstances surged from 68.2% to 76.2%. Across different age groups, particularly among those aged 30–44, a rise in positive responses was observed, climbing from 62% to 72.6%. However, it was the younger demographic, individuals under 29, who exhibited the most optimistic outlook, with 82.7% anticipating an improvement in their personal financial situation over the next 12 months. Regionally, districts under republican subordination took the lead, with 82.7% of residents expressing positive sentiments.
Continued growth was also observed in expectations for economic improvement, with the subindex for economic expectations over the next 12 months increasing by 2.2 points, reaching a new record of 180.9 points. A rise in optimism was noted among the older generation aged over 60, with 91.4% expressing optimism. Dushanbe displayed significant progress, with the share of those expecting an economic upturn increasing from 74% to 86.3%. However, the Gorno-Badakhshan Autonomous Region recorded the lowest figure at 74.1%.
Inflation concerns continued to ease across Tajikistan, mirroring trends in other Central Asian countries. Perceptions of inflation, in particular, witnessed a decline for the fourth consecutive month. Moreover, respondents' inflation expectations also decreased, with only 9.3% expecting a rise in prices in the coming month. Over the one-year horizon, the share of individuals expecting faster price growth fell from 12.1% to 10.8%, marking record lows for Tajikistan.
Credit and deposit confidence indices experienced significant increases in January, with 28.4% of the population considering it a good time to obtain loans and the share of positive responses regarding deposits rising from 52% to 59.8%. While overall confidence levels remained high, there was a slight decrease in the level of calm among residents, with 83.1% considering the current period to be calm.
In January 2024, consumer confidence in Central Asia rebounded overall after a minor dip in December. While Kazakhstan saw a slight decline in its consumer confidence index, it remained above the neutral threshold, indicating increased optimism compared to January 2023. Conversely, Kyrgyzstan and Uzbekistan reached new record highs in consumer confidence, while Tajikistan maintained its position with the highest confidence level.
Kyrgyzstan experienced the most improvement in consumer confidence, particularly in assessing the favorability of purchases, surpassing Tajikistan. Positive sentiment also increased among rural residents. In Uzbekistan, consumer confidence reached record levels due to an improved economic outlook.
Tajikistan's consumer confidence showed mixed movements, with only two out of five sub-indices exhibiting growth. However, expectations for personal well-being and the economy reached new highs. Kazakhstan saw a decline primarily due to concerns about personal financial situations but maintained relatively high expectations for economic improvement.
Inflation estimates and expectations decreased significantly across Central Asia, particularly in Kyrgyzstan and Tajikistan. Devaluation expectations remained stable, with Kyrgyzstan reaching record lows. Despite challenges, overall positivity increased, reflecting a shift away from concerns about rising prices. However, efforts to stabilize food prices remain crucial.
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