Consumer Confidence in Central Asia in June 2024: maintenance of set trends
Author: Daniyar Orazbayev, analyst, Freedom Finance Global
For the twelfth month, Freedom Finance Global has been researching consumer confidence, inflation and devaluation expectations of residents of four Central Asian countries: Kazakhstan, Uzbekistan, Kyrgyzstan and Tajikistan. In June 2024, the previously set trends continued, although the dynamics of inflationary and devaluation sentiment turned out to be mixed.
In June, the Consumer Confidence Index (CCI) in Kazakhstan continued to grow, which is now confidently in the positive zone above 100 points and is growing for the third month in row. Kyrgyzstan has gained a foothold on the second line, shows an increase in optimism for the fourth month in row reaching new records. At the same time, the negative dynamics in Uzbekistan that caused mostly by administrative decisions continues to persist for the third month in row. Tajikistan is still the leader of the region with the CCI that remains unchanged for the fourth month in row.
In Kazakhstan and Uzbekistan, analysts collect 3,600 questionnaires each month, 1,600 in Kyrgyzstan, 1,200 in Tajikistan, pro rata the size of the population in the countries under research. The research is based on the methodology used to obtain consumer confidence indexes in many countries around the world and adapted to local needs by the United Research Technologies Group research company. Data collection method: telephone survey. The survey questionnaire is localized: the research is conducted in the native language of the respondents.
Kazakhstan
The Consumer Confidence Index (CCI) in Kazakhstan showed an improvement in June for the third month in row and reached 103.7 points, which indicates a more confident stay in the positive zone above 100 points. The improvement in sentiment was almost uniform across all five sub-indexes. At the same time, we can distinguish assessments of the economic state and favorable conditions for large purchases. It is also noted that the CCI index was 6.8 points higher in comparison with last year's June.
Continued recovery of positive economic situation
The sub-index of past changes in the economic situation over the past year continues to recover for the third month in row. This time it increased by 3.9 points and reached 78.1 points. 18.3% of the surveyed Kazakhstanis believe that the economic situation in the country has shown improvement, although there were only 16.4% of them in May. Nevertheless, a significant majority (44%) continues to give the opposite answer.
In the age section, a noticeable improvement was shown by the group of 60 years and older. Among them, the share of positive respondents increased from 15.3% to 19.4%, which is the second result among age groups. Young people under the age of 29 continue to be in the first place, where 21.6% of them choose positive answers.
Regionally, the greatest increase in positive responses is observed in Zhetysu Region, where the share of positive responses increased by 11 p.p. to 21.8%. Nevertheless, the largest share of optimists (29.9%) is observed in the Turkestan Region, which is significantly higher than the national average. The worst response was given in the Akmola Region, where this share fell by 7 p.p. and amounted to only 11.8%.
More and more people are ready to make large purchases
The second sub-index that showed the greatest improvement compared to May was the assessment of the current favorable conditions for large purchases. This index increased by 3.7 points and reached 76 points, which is the best result in all 22 months of data collection. 32.5% of Kazakhstanis believe that now rather favorable conditions for large purchases. In May, the share of such people was 2 p.p. lower. At the same time, 57.6% of respondents have the opposite opinion, which is 2.7 p.p. less than in May.
Among the age groups, the greatest increase in the level of optimism is again observed in people over 60 years of age. Among them, 27% gave a positive response, while their share was 21.1% in May. On the other hand, among young people under 29, on the contrary, there was a decrease in optimism. 45.8% indicated favorable conditions for current purchases in May, but in June this index fell to 42.2%. However, this result is still the highest among all age groups.
In the regional context, Mangystau Region showed the best progress, where this index increased from 23.5% to 44.2%. Moreover, this share was the highest in June with a slight advance on the indexes of the Turkestan Region. On the other hand, Aktobe Region experienced the largest decrease in the share of positive responses from 36.7% to 24.6%, which made this region the main outsider of the month.
Inflation estimates hit record lows
Inflation estimates of Kazakhstan residents continued to decline after a record low in May. Over the past month, 39% of residents (39.7% in May) noticed a strong increase in prices. The record low index was updated for the third month in row. However, in the case of strong price growth in the horizon of the past year, the decline was much more noticeable. The share of those who noticed a faster price increase than before fell from 55.1% to 52%, which is also a new record.
Inflation expectations of Kazakhstanis have slightly increased on average. The share of people who expect a strong price increase over the one-month horizon remained unchanged at 16%, which is close to a record. On the other hand, over the next 12 months, slightly more people are waiting for an acceleration in price growth: from 19.2% to 20.9%.
A similar survey of the National Bank of Kazakhstan of inflation estimates and expectations again showed similar dynamics. According to its data, the share of those who expect a strong price growth during the year increased from 24.9% to 26.4%. Moreover, in the one-month horizon, the same index increased from 17.7% to 18.5%. However, inflation estimates have again updated multi-month lows in both the one-month and 12-month horizons.
Among certain goods and services, the majority of respondents are still concerned about a significant increase in food prices. The list of the most noticeably more expensive products remains unchanged: ‘meat and poultry’, ‘milk and dairy products’, ‘bread and bakery products’ and ‘vegetables and fruits’. However, for bread this time, far fewer people noticed a strong increase in prices: 24.6% against 31.9% in May. Nevertheless, we note that these food products continue to be in the top-4 of the surveyed Kazakhstanis for the last eight months in a row. In general, a particularly noticeable increase in inflationary sentiments did not appear for particular products, except for the Internet and communications. For this type of service, the share of those who noticed a strong price increase increased from 4.7% to 12.1%. We note a slight decrease and stabilization of the same index for housing services and utilities about 15-16%. According to official statistics, the average monthly increase in utility tariffs was only 0.2%, which is significantly lower than in the previous two months (0.9 and 0.7%).
Devaluation expectations have risen sharply
Kazakhstanis’ devaluation expectations rose sharply in June compared to May, as the tenge weakened by almost 6% against the US dollar. According to the survey, the share of Kazakhstanis, who wait for the tenge to weaken in the horizon of one year, increased from 48.9% to 56.2%, and from 29% to 36.9% in the one-month horizon. Both indexes are not far behind record levels. The first only by 0.2 p.p., and the second by 1.6 p.p. Recall that past records were recorded in September 2023 with a similar sharp weakening of the tenge against the US dollar.
Uzbekistan
The Consumer Confidence Index of Uzbek citizens in June 2024 shows a decline for the third month in row. However, this time the rate of decline slowed down and amounted to only 0.9 points, which led to an update of the CCI anti-record in Uzbekistan of 125.9 points. This time, the decline occurred only in three of the five sub-indexes. Nevertheless, a significant decline in forecasts of the economic situation and estimates of personal financial situation was able to outbid a small increase in the positive outlook in the other two issues.
The forecast of the economic situation has sharply worsened
The sub-index of the forecast of changes in the economic situation over the next 12 months decreased by 3.6 points, updated the anti-record for the entire research period and reached 148.1 points. 61.4%of Uzbek residents believe that the economic situation will improve, although this figure was 62.8% in May. Among the age groups, young people under 29 years of age show the greatest deterioration in the forecast. In the previous month, the share of positive responses of young people reached 63%, in June it fell to 60.7%. In general, the results between the age groups were again uniformly similar and amounted to 60-65%, but this time the leaders were people over 60 years (65%). Respondents aged 30-44 were the worst respondents, slightly behind young people with a score of 60.4%.
In the regional context, a significant decrease in the index occurred in the Surkhandarya Region. The share of respondents, who chose positive answers, fell from 69 to 58.9% there. Namangan Region became the clear leader of this month with the share of optimists in 68.6%. While the outsider is again Tashkent, where, despite the fact that the index increased from 48.2 to 51.2%, it is still the lowest value with a gap of 5.1 p.p. from the Syrdarya Region.
Slight deterioration of personal financial situation
The second sub-index that showed the largest decline in June was the assessment of changes in personal financial situation over the past 12 months. The sub-index, however, fell by a much more modest 1.8 points and reached 126.6 points, which is the third lowest index for the entire research. 53.8% of Uzbek respondents believe that their personal financial situation has improved. In May, the share of such respondents was significantly higher and amounted to 56.9%. The worst dynamics among age groups occurred in the group of 45-59 years, where the share of positive responses fell from 51 to 47.3%. This result is also the lowest among all ages. Young people under 29 remain among the leaders by a large margin with 64.8% of positive answers, although this share was 2.5 p.p. higher in May.
In the regional context, the greatest change in results is observed in the Syrdarya Region, where the share of people who noticed an improvement in their personal financial situation fell from 61.4% to 51%. Nevertheless, the outsider is still Tashkent, where, despite a slight increase in positive responses, the share of positive responses was 47.5%. This, however, is not much lower than the result of the Samarkand Region. The leader this time was the Khorezm Region with such index of 61.8%, which is 3.4 p.p. less than in May.
Inflation expectations hit new lows
Inflation expectations of Uzbek residents continued to decline for the second month in row. Inflation estimates also fell markedly, which approached March levels before the zero VAT rate was abolished. So, over the past year, 44% of residents felt a very strong increase in prices against 48.5% in May. And in the last month's horizon, the share of those who felt a strong price increase fell from 27.7% to 22.2%. Inflation expectations also declined significantly in both periods and updated new absolute lows for the entire research period. The share of those expecting a strong price increase next month decreased from 13.2% to 10.5%. Over the next year, 24.8% of respondents expect faster price growth compared to 28.1% in May.
According to official statistics, a monthly deflation of 0.2% was recorded in June. However, annual inflation accelerated slightly: from 10.55% to 10.6%. After a sharp increase in prices in May, June turned out to be much gentler due to the seasonal decline in prices for vegetables and fruits, which probably had a positive effect on the mood of residents. Vegetables fell in price by 13.9% MoM, and fruits and nuts by 4.8% MoM. As a result, ‘fruits and vegetables’ showed the most positive result in terms of the most expensive goods and services for the entire research. Only 17.2% of respondents chose this option, while their share was 23.6% in May, and 43% last July. Nevertheless, the troublemakers of the past months ‘housing services and utilities’ and ‘drugs and medicines’ continue to occupy the top lines. In May, 44.1% of residents noticed a strong increase in prices for housing services and utilities, in June this share reached a new record of 50.4%. In terms of medicines, the index increased from 29.5% to 32.2%. Meat, poultry continues to be in second place with a share of 42.2%. We note a partial recovery in the share of those who noticed an increase in gasoline and fuel prices: from 19.4% to 23.2%. This was probably due to 11.9% MoM increase in methane prices.
Sharp decline in devaluation expectations
In June, the devaluation expectations of Uzbekistan residents continued to decline and reached a record low for the entire research. The share of those who expect the sum to weaken against the US dollar over the next 12 months fell from 63.4% in May to 56% in June. While, the share of pessimists decreased from 43.5% to 35.7% in the one-month horizon. In June, the Uzbek sum continued to strengthen for the third month in row, which last happened two years ago and positively affected the mood of the population.
Kyrgyzstan
In Kyrgyzstan, the Consumer Confidence Index showed an increase in June for the fourth month in row. At the same time, the growth rate accelerated and reached 4.5 points, and the CCI reached a record of 136.6 points for the entire research. All five sub-indexes that determine the composite level of the CCI increased relative to May. Once again, the greatest growth is observed in the issue of current favorable conditions for large purchases, which sub-index significantly exceeded the neutral limit of 100 points.
Favorable conditions for large purchases reached a new record
The sub-index of current favorable conditions for large purchases is growing for the fourth month in row. At the same time, the second consecutive month of growth was impressive. In April, the sub-index reached only 90.4 points, and 99.9 points in May, then it was already 108.2 points in June. As a result, Kyrgyzstan is consolidating its leadership in Central Asia on this issue, and the index itself turned out to be a regional record for the entire research. 43.3% of residents point to favorable conditions for shopping online, while only 34% have the opposite opinion. In May, the share of these groups was 38.2% and 37.8%, respectively. In terms of age, the highest growth was shown by the older generation over 60 years in June. In May, the share of positive responses reached 32.5% of them; it jumped sharply in June to 39.3%, but remained the worst index among all four age groups. The greatest optimism is again observed among young people under 29, where 51.3% gave a positive answer. Although earlier, this share was only 46.8%.
In the regional context, a sharp increase, compared to May, in the share of positive responses (from 27.4 to 50%) is recorded in the Naryn Region. Nevertheless, the leader of June was Jalal-Abad Region, where the same index reached 54%. The worst response rate was again in Bishkek, where the share of positive responses decreased from 32.3% to 31.4%. We also note a sharp reduction in the share of optimists in the Talas Region: from 48.9% to 36.6%.
A record has been set for personal financial situation estimates
The sub-index of changes in personal financial situation in Kyrgyzstan increased by 4 points and reached a record 128.4 points. The share of people who positively assess changes in their personal financial situation over the past 12 months increased from 47.1% to 50.2%. All four age groups showed an increase in optimism, but it is most strongly observed in the group of 45-59 years. The share of respondents who chose positive answers increased from 42.1% to 48.9% there. Nevertheless, the leaders are again young people under 29, where the same index increased from 53.6 to 54.1%. At the same time, the worst answer was given by the age group of 30-44 years. Among them, the share of positive responses increased by 3.5 p.p., but the result of 48.1% was still smallest. It should be noted that the other two groups are slightly ahead of the outsider.
In the regional context, significant growth is observed in Osh Region. The share of those who report that their personal financial situation has improved over the past year has increased from 47.5% to 58.5%, which is also the highest absolute result among regions. The worst performers were residents of Bishkek, where the same index fell from 41.4% to 38.2%.
Inflation estimates and expectations showed mixed dynamics
Inflation estimates and expectations of Kyrgyzstanis showed mixed movement in June, although new records were achieved in terms of issues within the 12-month horizon. In May, 24.2% of respondents felt a very strong increase in prices over the past month, while 25.6% of respondents felt a very strong increase in prices over the past month in June. However, on the other hand, estimates of price growth over the past 12 months have fallen to a record. In June, 44% of Kyrgyzstanis recorded an acceleration in price growth, while this figure was 46.4% in May. Official annual inflation data shows a continued decline in June from 4.6 to 4.5%, which is a record since February 2020.
The inflation expectations of Kyrgyzstanis also showed a multidirectional movement depending on the time horizon. The share of respondents who expect faster price growth in the next 12 months fell from 12.3% to a record 10.9%. However, the share of those who believe that prices will rise very much next month increased from 6.2% to 7.9%.
Among the particular goods and services for which residents noticed the greatest price increase, we once again note flour, which remains the leader of the rating for at least the last ten months. Nevertheless, the share of respondents who chose flour continued to decline and reached the lowest values for the above period. 46.9% of residents noted this product, while there were 48.2% of them last time. We note once again that the list of top-5 products for which the greatest price increase is noticeable has also not changed for the tenth month in a row. In addition to flour in June, 42.7% of respondents mentioned vegetable oil, 37% sugar and salt, 34.9% vegetables and fruits, and 33.5% meat and poultry. Prices for vegetables rose sharply over the month by 9.2% MoM and fruits by 3.5% MoM in June. Prices for the rest of the above-mentioned goods almost remained at the level of May.
Devaluation expectations at record lows
The Kyrgyz som continued to gain significantly in June for the third month in row. The US dollar-som pair fell in value by another 1.4%, and as a result, the overall strengthening of the som amounted to a significant 3.4% in three months. The last time such a low exchange rate was observed in February 2023. All this had a restrained effect on the mood of Kyrgyzstanis, whose devaluation expectations slightly decreased in June, but still updated the record low values for all 12 months of the research. In May, 27.7% of residents expected the som to weaken in a year, but the share of such people was 25.6% in June. The share of pessimists regarding the US dollar's growth in the one-month horizon fell from 15.9% to 14.9%.
Tajikistan
The Consumer Confidence Index in Tajikistan rose slightly from 146.1 to 146.8 points in June. In general, the index has been at approximately the same levels for the past four months. Nevertheless, some sub-indexes show a multidirectional movement relative to May. Estimates of the current favorable conditions for large purchases, which fully recovered from the losses of the previous three months, rose the most. On the other hand, the remaining four sub-indexes showed a decline, most of which are residents' forecasts for the economic situation in the next 12 months.
Conditions for large purchases have recovered
The sub-index of the current favorable conditions for large purchases and spending increased sharply in June by 9.9 points to 84.9 points, which indicates an almost complete recovery after three consecutive months of decline. 41.7% of respondents gave positive answers compared to only 37.3% in May. In the context of age groups, improvement is observed on the entire front. However, the greatest progress in results is recorded in people over 60 years of age. The share of optimists increased from 33% to 42% among them in a month. However, young people under 29 gave the best response; the index reaches 45.4% among them. The remaining two age groups (30-44 and 45-59 years) showed similar results of 39.2% and 39.4%, respectively.
In the regional context, a sharp recovery is observed in the Gorno-Badakhshan Autonomous Region, where the share of optimists increased from 21.2% in May to 55.2%. Recall that in March, this index reached 54.4% in this region. This autonomous region eventually became the leader of June. The other four regions are also experiencing improved results. The most noticeable progress occurred in Dushanbe (+8 p.p.) and districts of republican subordination (+6.5 p.p.). However, the result in the districts of republican subordination was the lowest among all: only 37.5%.
Slight deterioration in expectations for the economic situation
On the other hand, residents' forecasts for the economic situation in the next 12 months turned out to be worse than in May. However, this sub-index fell only to 180 points, which indicates overwhelming optimism among respondents. The share of optimistic respondents was 84.2% in June against 87.4% in May. In terms of age, a decrease in optimism was recorded in all age groups. Despite the decrease, young people under 29 responded best taking the lead from the older generation over 60. 89.6% of young people expected an improvement in the economic situation In May, and this figure dropped to 85.3% in June. However, people over 60 experienced the greatest deterioration in results. The same index decreased from 90.7 to 81.9% among this age group, which is also lower than among middle-aged people.
There is a decrease in the proportion of residents, who expect the economic situation to improve over the next 12 months, in all regions. At the same time, the results were fairly uniform across regions. If the leader of June, the Gorno-Badakhshan Autonomous Region, has a share of optimists of 86.1%, then the outsider, districts of republican subordination, has a slightly lower index: 82.7%. The greatest regression is observed in Dushanbe, where the share of positive responses decreased from 88.3% to 83.8%.
Slight increase in inflation estimates and expectations
Tajikistanis' inflation estimates and expectations increased slightly in June after record lows in April and May. The share of respondents who noted a strong increase in prices over the past month increased from 16.5% to 18%. Over the past 12 months, the share of those who experienced faster price growth fell from 22% to 21.4%. Inflation expectations of Tajikistan residents also showed similar dynamics in different periods. 7.1% of residents expect a very strong price increase in the coming month, compared to 7.5% in May. While the share of people expecting faster price increases over the next 12 months has increased from 8.7% to 10.9%.
Official inflation figures for June have not yet been released, but annual inflation rose slightly in May: from 3.4% to 3.6%. Among particular products, the price of flour continues to be the most worrying for Tajikistan residents. However, the share of such people has decreased from 37.2 to 34.6% over the past month. There has been an increase in the number of people, who have noticed an increase in prices for meat and poultry, for the second month in a row. If there were 33.5% of them in May, then this share reached 34.3% in June. The same dynamics is observed for vegetable oil, fruits and vegetables. Thus, these four products remain unchanged and occupy the top lines of the rating. According to official statistics, prices for meat and meat products increased by 0.6% MoM in May. Prices for fruits increased by 5.4% MoM in May with an annual growth rate of 21.3%, while prices for vegetables fell by 4% over the month.
Devaluation expectations increased despite strengthening of somoni
In June, devaluation expectations recovered in Tajikistan after record lows in May. It should be noted that the US dollar exchange rate against the somoni has shown a decline for the second month in a row. This time, the rate fell by 0.8% after a 1.5% decline in May. However, the continued strengthening of the somoni was against the survey results. The share of those who expect a weakening of the national currency increased from 13.7 to 15.8% over the month. 25.2% of the country's population expects a weakening in the next year (21.1% in May).
Conclusions
June 2024 was mostly positive for the Central Asian countries. Kazakhstan has shown a noticeable increase in the Consumer Confidence Index (CCI), which confidently crossed the neutral threshold of 100 points for the first time since January. The greatest improvement is recorded in the assessment of the economic situation in the country, as well as in the issue of the favorability of conditions for large purchases. Although there are still several points to go before the November 2023 record, the June result was the third in all 22 months of data collection. We should also note the significant increase in the CCI in Kyrgyzstan, which updated a new record and consolidated its position in second place in the region ahead of Uzbekistan by more than 10 points. This happened largely due to the new record for the favorability of conditions for large purchases. Now, the majority of residents of Kyrgyzstan express a positive opinion on this issue setting an absolute record for the entire research in Central Asia.
The only country that showed an increase in pessimism compared to May was Uzbekistan, where the CCI broke an anti-record and has been falling for the third month in a row. Nevertheless, the decline was small, and respondents showed an increase in positivity in two out of five questions. However, the forecasts of Uzbekistan residents for the economic situation over the next 12 months have deteriorated especially noticeably.
Let us recall that all this took place amid the abolition of the zero VAT rate on housing services, utilities, and medicines. All this led to the recent acceleration of inflation. However, the seasonal decline in prices for fruits and vegetables in June and the overall monthly deflation probably became a factor in the decline in inflation estimates and expectations. These parameters have significantly improved in Uzbekistan and almost reached March levels. In Kazakhstan, inflation parameters have mostly shown a decline, although not as confidently. The share of those who noticed an acceleration in price growth over the past year has fallen significantly to record lows. In Tajikistan, on the contrary, there is a slight deterioration in inflation estimates and expectations. Nevertheless, the growth is generally insignificant and not widespread, and it occurred after record lows in May. In Kyrgyzstan, the dynamics of inflation estimates and residents' sentiments were also mixed. Moreover, the decline occurs only in questions with a one-year horizon, while residents show more pessimism in questions of a strong rise in prices over a one-month horizon.
Devaluation expectations also showed mixed trends in Central Asian countries. While devaluation expectations have increased markedly in Kazakhstan and Tajikistan, they have apparently decreased in Uzbekistan and Kyrgyzstan. We would like to highlight the two largest countries in the region, where sentiment has changed dramatically. In Uzbekistan, the share of people who expect the national currency to weaken in different periods has fallen sharply by 7.4–7.7 p.p. Thus, devaluation expectations have reached record lows. In Kazakhstan, more people expect the US dollar to grow amid the tenge weakening by 7.3–7.9 p.p. At the same time, expectations turned out to be slightly lower than the records set in September 2023, when the tenge also weakened sharply. In Tajikistan, devaluation expectations have not grown as significantly having bounced off the May lows. At the same time, the US dollar has shown a weakening by the end of the month once again in the region (except Kazakhstan). Devaluation expectations have reached new lows in Kyrgyzstan amid all that factors.
The twelfth wave of the consumer confidence survey in four Central Asian countries shows the development of previously set trends. Kazakhstan continues the growth that began in April and now is confidently in the positive zone, while Tajikistan has maintained its position for the fourth month in a row. The dynamics of the CCI remains negative in Uzbekistan and is now significantly behind Kyrgyzstan, where the CCI has reached new records. The continued acceleration of annual inflation may cause further negative dynamics of the CCI in Uzbekistan. In addition, the weakening of the tenge and the possible impact on inflation may play a similar role in Kazakhstan.
