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Unfavorable forecasts. Everything to rise in price in 2018

If in 2016 prices in Kyrgyzstan fell, then in 2017 they were steadily growing. There was no sharp increase, of course — as of December 15, inflation reached 3.7 percent. Next year, experts predict a much higher price increase.

Prices will rise, but within reasonable bounds

According to the National Bank forecasts, in 2018 the average inflation rate will be 5.5 percent. The largest increase in prices is expected by the end of the year. According to the results of the fourth quarter, the figure could reach 7.7 percent.

«Taking into account the growth of inflationary pressures from the increasing aggregate demand and inflation expectations, the price dynamics in the medium term will show growth and will strive for target values ​​of 5-7 percent,» the monetary policy report of the National Bank of Kyrgyzstan on the results of the third quarter of 2017 says.

Aigul Berdigulova, Economist of the Eurasian Development Bank (EDB) Chief Economist Group, agrees with the forecasts of the National Bank.

According to EDB estimates, by the end of 2018, prices for goods and services will grow by an average of 5.5 percent.

«In November 2017, inflation at an annual rate was 4 percent that is below the target benchmark of the National Bank. Expanding domestic consumer demand fueled by the inflow of remittances and fiscal stimulus measures, the expected changes in the tax and tariff policies will contribute to the entry of inflation into the target corridor,» noted Aigul Berdigulova.

Problems at border make themselves felt

The President of the Association of Suppliers, Manufacturers and Distributors Gulnara Uskenbaeva is sure that there will not be a sharp rise in prices in Kyrgyzstan in 2018. There is no reason for panic. There will be inflation, but within the normal limits. In 2018, the situation will be affected by the November problems on the Kyrgyz-Kazakh border.

Transport companies raised transportation prices by 30 percent because of them. The problem at the border was resolved, but the prices remain high.

Gulnara Uskenbaeva

«If this was a temporary increase, then we certainly would not have touched our prices. But now we have to do it,» said Gulnara Uskenbaeva.

Our entrepreneurs work with clients from Russia and Kazakhstan using the so-called «soft» currency — rubles and tenge, but it does not help to restrain prices increase. Suppliers index prices each year against the dollar. Therefore, albeit with a certain delay, but Kyrgyz traders raise prices.

«There may be problems with exchange commodities: the same flour, sugar, rice, the prices depend on the fluctuations on world commodity exchanges, they are paid attention to by the Russian and Kazakh producers. If they revise prices, we will have to do it also,» Gulnara Uskenbaeva commented.

We launched two plants — Kaindy-Kant and Koshoy. Thanks to this, sugar prices will remain stable.

Gulnara Uskenbaeva

The Association of Suppliers expects a small — five percent — rise in prices for imported goods. For example, vegetable oil, pasta and flour can rise in price, as well as some types of confectionery in connection with the revision of prices by suppliers.

«Our officials and deputies want to finish off the milling industry. This is a standard situation. As soon as the domestic producer is «finished off» through dumping, price increases begin. And no one will be able to regulate this, because these are import prices. They will be raised by foreign producers, and our country will have to adjust to it,» concluded Gulnara Uskenbaeva.

Urgently take a mortgage

The President of the Association of Markets, Trade Enterprises and Services Sergey Ponomarev is optimistic in the forecasts. He is sure that the Kyrgyz economy had overcome the peak of the crisis in mid-2016. Since then, there has been a gradual recovery in business activity.

«In 2017 this trend was fixed. We have already got used to new rules and norms of economic activity, primarily external one,» he said.

We have practically adapted to the EEU. As a result, in 2018, GDP growth may be 7-8 percent, and under the most optimistic scenario — up to 9 percent.

Sergey Ponomarev

«Accordingly, business activity will also grow. Therefore, we can look with optimism to the next year,» Sergey Ponomarev is sure.

The economist notes that prices will also grow after GDP. However, inflation of 5-8 percent is quite normal and standard for developing countries. In Kyrgyzstan, the growth of prices almost over all the years of independence was approximately in these limits. The exception was only in 2016, when there was a deflation.

In developed countries, inflation at 1-2 percent is considered as normal, in developing countries- it is 5-8 percent. So do not worry and panic.

Sergey Ponomarev

Instead of worries about rising prices, the economist advises the Kyrgyz people to benefit. So, relying on the inflation forecast, he advises to take a preferential mortgage.

«When they said that the mortgage will be at 8 percent per annum in national currency, taking into account inflation, it is a social blessing that the state consciously provides for our citizens to acquire housing. Those who have the opportunity, who think, take or not take a mortgage, I can say — take it. Do not even think. This money during those years, while a person will pay on a loan, will depreciate at the same rate,» Sergey Ponomarev concluded.

Iron horses turn into gold ones

The last months of 2017 in Kyrgyzstan were marked by a sharp rise in prices for petroleum products. It turned out that the errors in the fuel balance was to blame. The government hoped for two local oil refineries, which were provided with supplies of duty-free Russian oil. But the refineries failed to fulfill the obligations, and prices rose.

The State Antimonopoly Agency said that there is enough fuel in the republic and there will be no increase in prices until the end of 2017. Over the past week, gasoline has fallen in price a little, but diesel fuel has risen in price by 1 som.

Kyrgyzstan is completely dependent on Russia as for the supplies of fuel. Analysts forecast higher prices for fuels and lubricants in Russia. «Retail prices for gasoline in 2018 will grow at a rate close to inflation, and possibly higher,» Raiffeisenbank Analyst Andrey Polishchuk told RIA Novosti.

The expert of Skolkovo Business School Energy Center Ekaterina Grushevenko stressed that, in her opinion, the rise in gasoline prices will not be rapid, but obvious.

«Most likely the cost of oil products will increase. The main causes will be natural inflationary processes in the economy. Another, not less weighty reason, will be the growth of excise taxes on fuel. The third reason is the growth of fees from the infrastructure of the gas stations,» she explained.

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