EAEU countries seek to foster mutual trade
With Kazakhstan-Eurasian Economic Union trade turnover having been totaled at $6.1B in the first four months of this year, Russia is a number one trade partner of Kazakhstan within the EAEU at 91.8 per cent. Trade with Russia is expected to go beyond $18B by 2019.
Last year Kazakhstan’s overall foreign trade stood at $93.5B (+20.5% per year), where Kazakhstan-EAEU trade makes up 21.3 per cent.
Imports, which equaled 69.6 per cent ($4.3B) in the first months of 2019, led in trade of Kazakhstan with the EAEU, meanwhile exports amounted for 30.4 per cent or $1.9B.
In 2018, EAEU external trade turnover stood at $753.4B, 18.8% up from $634.2B, thus having been boosted by a third since the establishment.
The EAEU members strive to fostering mutual trade through joint markets at national and supranational levels. That was meant to facilitate integration processes and transparent mutually beneficial conditions within the Union. Given development in industry collaboration, EAEU mutual trade has the potential for growth.
Since the EAEU establishment, single markets for labor, services, medical equipment and medication have been set up. This year it is planned to bring to fruition a joint electricity market in an effort to establish transparent pricing and trigger the industry.
Common markets for oil and oil products, gas, and transportation services as well as a financial market are slated for 2025.
In late 2018, EAEU mutual trade was $59.7B, up by 9.1 per cent than $54.7B in 2017.
Investment is key to EAEU economies in terms of growth; while trends in investment contribute to integrated development of financial systems of neighbors.
A positive trend is spotted in investments from EAEU States as $1.6B, 19.5 per cent up, of FDI recorded in late 2018. With the gross inflow of $1.5B FDI, Russia is a major EAEU investor in Kazakhstan. Last year saw a 6.2 per cent growth in Russian investments (5.9 per cent in 2017). So, a Kazakhstan-EAEU investment partnership continues to grow in spite FDI from the EAEU equals mere 6.4 per cent (5.4 per cent in 2017).
The reduction in outflow of direct investments abroad and to the EAEU countries is observed. In 2018, Kazakh investments of $442.6M went into EAEU economies, 33.6 per cent of the country’s total investment flow. Among key factors in such reduction and active consolidation within the country was Kazakhstan’s transition to a new model of economic growth, which is meant to ensure a 4.5–5 per cent growth in GDP each year.
2018 brought a positive change in all EAEU economies. Kazakhstan saw 4.1 per cent growth in GDP, Russia – 2.3 per cent, Belarus – 3 per cent, Kyrgyzstan – 3.5 per cent, Armenia – 5.2 per cent.
With Kazakhstan-EAEU trade turnover directly impacting on GDP per capita, $1M worth increase in exports and imports with the Union countries resulted in $473 growth in GDP per capita. It adds up to 65 per cent growth in GDP growth per capita. So, the EAEU’s role in development of each nation is high.
Among Kazakhstan’s crucial projects of 2018, which are key to integration processes, is the Astana International Financial Centre and the AIFC Exchange – AIX. The AIFC is based on general financial law, brining broad integration opportunities. At the 29 May 2019 EAEU Summit, Kazakh President Kassym-Jomart Tokayev informed of the AIFC’s preparedness on behalf of the EAEU for the pairing of the “Belt and Road” initiative. That is, the AIFC attracts infrastructure investments through the unique research and exchange ecosystem, which then will be used to carry out projects throughout the EAEU.
Last year was also full of events regarding EAEU development and interaction between regulatory authorities of EAEU countries. One took place in 2018, which was the Declaration on further development of EAEU integration processes, adopted and signed on 7 December in St. Petersburg, Russia, at a Supreme Eurasian Economic Council meeting.
Other high-priority areas include:
• enhancing the EAEU single market and its opportunities for business and consumers;
• forming “territory of innovation” and stimulating scientific and technical breakthroughs;
• unlocking the integration potential for people, improve wellbeing and life standards;
• establishing the EAEU as a significant center of development of today’s world, open for the sake of mutually beneficial and equal cooperation with external partners and new interaction formats.
Digitalization is of special significance. At the 14 May 2018 EAEU Meeting, First Kazakh President Nursultan Nazarbayev pushed forward a proposal to set up a Digital Projects and Initiatives Management Office in the International Technopark of IT Startups in the city of Nur-Sultan in line with the EAEU digital agenda. That digital agenda is of national priority for Kazakhstan.
7 June 2018, Kazakhstan’s National Bank and Russia’s Central Bank inked an agreement aimed at cooperation and data exchange in supervision of financial market.
These events demonstrate a progress in the EAEU Treaty’s implementation, as the bodies actively work towards expansion of integration processes in areas of great importance to EAEU members.