Central Asia Developments The Skills Road More Than the Sum of its Parts
Presentation Outline 1. Geography, Growth and Jobs in Central Asia 2. Regional Trade, Business, and Connectivity 3. Regional Water-Energy Nexus 4. Emerging Challenges and Opportunitie Annex: The WBG in action - The Staff and Portfolio
1. Geography, Growth and Jobs in Central Asia
GDP Growth and Poverty Reduction KAZAKHSTAN UZBEKISTAN TURKMENISTAN KYRGYZSTAN TAJIKISTAN $42b $68b $240b $7b $8.5b GDP GROWTH SLOWS STABLE GDP GROWTH GDP GROWTH SLOWS GDP GROWTH GDP GROWTH SLOWS from average 6.5% in 2010-13 to of 8-8.5% in 2010-14 thanks to: (SOMEWHAT) from from average 7.4% in 2011-13 to DECL from 10.9% in 2013 4.3% in 2014 due to: Public investment 6.7% in 2014 due to: average 13.1% in 2010-12 to Low commodity prices Domestic consumption to 3.6% in 2014 due to: 10.2% and 10.1% in 2013 and 8.3% fall in remittances Weak demand and investment Low production at Kumtor 2014 Falling commodity export revenue MAIN GROWTH MAIN GROWTH MAIN GROWTH FACTORS MAIN GROWTH MAIN GROWTH FACTORS FACTORS Oil, Services FACTORS FACTORS Construction Trade and transport Services Construction Nat Gas Exports, Construction Public investment Industry, Construction Industry Trade Agriculture Trade Domestic Consumption Transport and Communication Industry Investment Industry Services Poverty rates in the region are steadily falling thanks to internal mobility, higher wages and transfers. Yet regional differences in poverty rates remain strong in Kazakhstan and Uzbekistan, and plunging remittances from Russia slowed the decline in poverty in Tajikistan and Kyrgyzstan.
TRADE AND POPULATION CENTERS 26m SELECETD FED SUBJECT AREAS $2tr 143m $16tr 500m 17m EU 25 1.4 mill 1.4b 30m 6m 5m 22m $9tr Xinxiang Province 8m 6 + m 6m 30m NORTHERN 1.7b NORTHERN NW+FATA 400m $1.8tr $2.4tr IRAN & MNA SOUTH ASIA
TRADE AND POPULATION CENTERS WHEAT WHEAT WHEAT MINING, COAL, CROPS OIL&GAS AGRICULTURE, TRADE, SERVICES, GOLD MINING, COTTON, ELECTRICITY
REMITTANCES CENTERS Uzbekistan Russia Tajikistan Kyrgyzstan
TRADE AND POPULATION CENTERS EXTRA-REGIONAL EXPORT CA 3% Other 18% EastAsia 18% Russia 7% EU27 , 52% OIL&GAS Consumer goods, equipment MINING, EXTRA-REGIONAL EXPORT IMPORT TO CA INTRA-REGIONAL EXPORT COTTON, Food 3% Transport, 3% Machinery Agric-r, 2% 4% ELECTRICITY 20% 4% 28% TURKMENISTA 34% 27% KYRGYZSTAN KAZAKHSTA TAJIKISTAN 11% UZBEKISTAN 7% 26% 24% 19% 96% Transport 18% 49% 69% Machinery, Textile, 46% 10% 40% N 50% Clothing, 25% 18% 2% Vegetable/Food Fuel Minerals Textile Other
BARRIERS & OPPORTUNITIES INTRA-REGIONAL TRADE BARRIERS EXTRA-REGIONAL TRADE BARRIERS OPPORTUNITIES FLEET DIFFERE ST ANDARD GROWING NT CA BECOMING S NO T ARIFF INTRA-CA TRANSACTI VIABLE RAILWA INCOMP A TI COOPERA TI COORDINA T AL TERNA TIVE ON COSTS Y BLE WITH ON ON TO CHINA-EU ION NO TECHNICAL GAUGE EU MARITIME TRAN LEVEL OPERA TIONA PHYSICAL ROUTES ST ANDARD IMPROVEME L SIT S NT OF INTEROPERA INFRASTRUCT FEES BILITY URE INTRA-CA TRADE AND LOW COMPETITIVENESS DESPITE GROWING OPPORTUNITIES OF TRANSPORT BARRIERS PROXIMITY TO GROWTH CENTERS EXTRA-REGIONAL TRADE Barriers to Trade: the poorest pays the highest price Kazakhstan Uzbekistan Kyrgyzstan Tajikistan DB 2015 OVERALL RANK 77 141 102 166 Trading Across Borders Rank 185 189 183 188 Time to export (days) 79 54 63 71 Cost to export (US$/container) 5,285 5,090 4,760 9,050 Cost to export (% of PPP GDP/capita) 23% 98% 148% 360% Time to import (days) 67 104 73 70 Cost to import (US$/container) 5,265 6,452 6,000 10,650 Cost to import (% of PPP GDP/capita) 23% 125% 187% 424%
Central Asian economies have varying scores on the areas covered by Doing Business in 2014/2015 Kyr yrgyz yz Kazak azakhstan an Uzb zbekistan an Taj ajikistan an Republ blic Global distance to frontier score 72.68 66.01 62.60 54.19 Ease of doing business 41 87 132 67 Starting a business rank 21 35 42 57 Dealing with construction permits 92 151 152 20 Getting electricity 71 160 112 117 Registering property 19 87 102 6 Getting credit 70 28 42 109 Protecting minority investors 25 36 88 29 Paying taxes 18 115 172 138 Trading across borders 122 83 159 132 Enforcing contracts 9 32 54 137 Resolving insolvency 47 126 75 147 Source : Doing Business 2016 . 10
GROWTH OUTLOOK TURKMENISTAN KYRGYZ R. TAJIKISTAN KAZAKHSTAN UZBEKISTAN INTERNAL INTERNAL INTERNAL INTERNAL INTERNAL FACTORS FACTORS FACTORS FACTORS FACTORS - COMPETITION - STRUCTURAL REFORMS - GROWING CONCERN - SUPPLY-SIDE -FINANCIAL SECT -REFORMS - EXPANSION OF REAL CONSTRAINTS ABOUT STRUCTURAL -SOEs INCOMES IS TO SLOW IN - POVERTY REMAINS REFORMS (FINAINCAL SECTOR, -FISCAL FRAMEWORK 2015 HIGH ENERGY) - INCREASE IN PRIVATE - UNSTABLE GOLD PARTCIPATION -JOBS EXTERNAL PRODUCTION EXTERNAL -LOW INVESTMENT FACTORS EXTERNAL FACTORS EXTERNAL - OIL PRICES FACTORS - RF & CHINA ECON FACTORS EXTERNAL -RF ECON PERF PERF. - EEU INTEGRATION -CHINA ECONO PERF FACTORS - GAS PRICES - DECLINING EXPECTED TO ALLEVIATE - EEU REMITTANCES FROM - CHINESE INVESTMENTS RF ECON PERF ECONOMY RUSSIA - IRANIAN SANCTIONS - DECLINING MIGRATION REMITTANCES FROM RUSSIA
Meeting the Jobs Challenge Challenge 1: A young growing population (j obs, migration) ECA Countries: Change in 15+ Population 20 10 - 20 30 (%) 50 40 Central Asia will need to create a million new jobs every year by 30 the end of the decade….. Percent 20 10 0 Moldova, Republic of Hungary Czech Republic Macedonia, TFYR Turkey Bulgaria Ukraine Georgia Latvia Lithuania Belarus Russian Federation Croatia Romania Estonia Bosnia and Herzegovina Poland Serbia Slovakia Slovenia Armenia Montenegro Albania Azerbaijan Kazakhstan Kyrgyzstan Turkmenistan Uzbekistan Tajikistan -10 -20 Source: Back To Work: Growing with Jobs in Europe and Central Asia (2013).
Meeting the Jobs Challenge Challenge 2: S kills are a constraint for employers (but few offer training to employees) Share of firms that say skills are a major or very severe constraint to their business 9 Mean = 30.2 8 EU10+1 and Turkey Western Balkans TJK 7 LI CIS MI CIS num ber of countries UZB 6 ARM CZE AZE 5 GEO EST BIH 4 KGZ UKR HRV KOS 3 ALB MDA LVA MKD 2 KAZ LTU POL SRB MNE BGR 1 RUS ROM BLR SVK SVN HUN TUR 0 Source: Authors’ calculations based on BEEPS 2008. Note: LI = Low Income, MI = Middle Income, x = % of firms (in respective countries) that consider education as an obstacle, Figure shows data obtained from the fourth round of the BEEPS carried out in 2008–09, which covered approximately 11,800 enterprises in 29 countries. See “Abbreviations” for a key to country abbreviations.
Responding to the Jobs and S kills Challenge 1. Development of Country Specific Jobs Strategy and Action Plans (Operations, TA and Analytical work) 2. Jobs and Skills Projects 3. Using the Jobs lens to all design all operations. 4. Getting ready for returning migrants in Uzbekistan, Tajikistan and Kyrgyz Republic
2. Regional Trade, Business and Connectivity
Trade procedures are a particular problem Common obstacles exist across all All four countries are in the worst performing 5% of DB Trade Across Borders countries in the region KZ Mean UZ KR TJ Time to export Nearly all goods are physically inspected at the border, leading to very slow 17 54 63 71 79 clearance, due to lack of risk-based KZ TJ KR UZ clearance Time to import 19 67 70 73 104 KR UZ KZ TJ Cost to export Physical infrastructure is often weak as a 1195 5285 4760 5090 9050 result of under-investment in logistics, KZ KR UZ TJ warehousing, etc. Cost to import 1400 5265 6000 6452 10650 KR KZ TJ/UZ All countries have limited automation of Docs to export trade procedures and low intra- 6 9 10 11 governmental coordination leading to KR KZ/TJ UZ onerous trade procedures. Docs to import 13 12 7 11
18 Despite strong economic Investment remains constrained Potential potential… for several reasons: Strong potential for hydro, wind, and Long term investment solar energy generation with horizon requires stable increasing regional demand (south investment climate ; lack of Asia) creditworthy offtakers; Energy Lack of security in licensing ; Enormous reserves of gold, silver, poor stability in tax policy coal, antimony, and other rare earth and incentives ; very high minerals. Mining trade costs Lack of ability to meet end Grain, cotton, textiles, wheat, dairy, market standards ; low fruit and vegetables with large regional productivity; Poor trade demand (Russia, East Asia & South logistics ; heavy state Agribusiness Asia) presence crowds out private investment Limited infrastructure ; Lack Growth sector for all countries with of robust technical and higher value added services in vocational training ; Trade consulting, accounting, legal, etc. in services barriers Services (professional licensing, etc.)
Transport Corridors CAREC SASEC Uz Roads Pap-Angren Rail CARS 1-2-3 Jumbo KZ Roads TAT Railways
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