Central Asian experts note that the so-called “special military operation” launched by Russia in Ukraine on February 24, 2022 has caused negative economic expectations in Central Asia.  However, the national economies in the region reportedly managed to survive due to high prices of natural resources, opening opportunities in trade and change in the ruble rate.  Inflation, migrants from Russia, increase in money transfers, changes in commercial routes and risks of secondary sanctions are the consequences of the war in Ukraine common for all Central Asian nations.  However, the countries have specific consequences.

The war in Ukraine reportedly affected the global food security because Ukraine and Russia were excluded from the global commodity exchange.

Kazakh experts note that that world’s breadbaskets of cereals, oil crops, meat products have been excluded from the global commodity exchange because of sanctions and the consequences of the sanctions.  The situation has reportedly resulted in the tremendous decline in wheat crop yields in Kazakhstan due to the disruption of the seed material supply chain, which was procured before the war from experimental seed fields in Ukraine and Russia.

Besides, over 27,000 companies have moved from Russia to Kazakhstan and they can now enjoy tax and customs preferences.

As far as Kyrgyzstan is concerned, Kyrgyzstan-based experts note that due to the war in Ukraine, trade flows, which used to pass through Russia, have changed and complicated logistics for businesses in Kyrgyzstan.  Previously, Kyrgyzstan delivered seeds, fertilizers, production resources, raw materials via Russia, and now it has to use the ‘middle way’, i.e. when it delivers via Kazakhstan, Caspian Sea, Azerbaijan, Georgia and further via the Black Sea.  It is a more expensive and complex method of delivery, and it has affected the cost of agricultural and food resources.

Besides, the arrival of great numbers of Russians, almost 70 percent increase compared to 2021, has reportedly led to real property and rent price hike.  Local experts say it has had a bad impact on locals who do not have their own houses.

Meanwhile, Uzbek experts say that in the first year after the war commenced, the economy of Uzbekistan adjusted to the changes.  Economic growth rates in 2022 reportedly were 5.7 percent.   Commodity export to Russia increased by 53 percent last year.  Export to other CA states is on the second place with growth by 22 percent.

The rate of re-export, according to open data, is nearly 10%-15%.  Money transfers have reportedly helped the economy of Uzbekistan to stand out.  However, Uzbekistan has faced increased inflation due to the rise in global prices of food, energy resources, transportation services, as well as the rise in prices of rent, real property, catering services due to the arrival of relocated Russians.  Expectations that investors leaving Russia would come to Uzbekistan were not met.  There are rare cases only.

Tajikistan, which is dependent on supplies of goods from Russia, has reportedly faced some shock due to the changes in the structure of sales turnover. In the first quarter of 2022, trade balance plummeted by 38 per cent, said economist Uktam Jumayev was quoted as saying. 

“In the second quarter of 2022, the crisis got worse and reached 48 percent.  Our government has raised the alarm: if everything continues the way it is now, the budget will decrease.  It is known that no foreign currency leads to devaluation of the national currency.  It results in negative consequences and rise in consumer prices,” the expert said.

According to Uktam Jumayev, bread prices have risen 25%-30%, sugar, meat and eggs prices have gone up by 40%-50%, energy resources have increased almost by 200%.  The expert said that Tajikistan has relied on the acceleration of industrial development, transition to green energy, and reconstruction of the domestic bank system dependent on intermediary operations of Russian banks.

Just like Kyrgyzstan, Tajikistan has faced rise in real property prices, while the welfare of locals has reduced significantly – poverty rates have increased this year by 5%-7% compared to 2022.  High unemployment rate in the country still forces Tajikistanis seek earnings abroad.  In 2022, 173,000 citizens of Tajikistan obtained citizenship of Russia.