Tashkent, Uzbekistan (UzDaily.com) – For the twelfth consecutive month, Freedom Finance Global has been studying consumer confidence, inflationary, and devaluation expectations in four Central Asian countries: Kazakhstan, Uzbekistan, Kyrgyzstan, and Tajikistan. In June 2024, the previously established trends continued, although the dynamics of inflationary and devaluation sentiments showed mixed results.

In June, Kazakhstan’s consumer confidence index (CCI) continued to rise, remaining in the positive zone above 100 points and increasing for the third consecutive month. Kyrgyzstan secured the second position and showed rising optimism for the fourth consecutive month, reaching new records. Meanwhile, Uzbekistan experienced continued negative dynamics, largely driven by administrative decisions, for the third month in a row. Tajikistan remains the regional leader, with the CCI holding steady at previous levels for the fourth consecutive month.

Kazakhstan

The consumer confidence index (CCI) in Kazakhstan showed improvement for the third month in a row in June, reaching 103.7 points, indicating a more confident position in the positive zone above 100 points. The improvement was observed almost uniformly across all five sub-indices. Notably, evaluations of the economic situation and the favorability of conditions for major purchases showed positive trends. Compared to June of the previous year, the CCI was 6.8 points higher.

Continuation of Positive Trends in Economic Situation

The sub-index of changes in the economic situation over the past year continued its recovery for the third month. This time it increased by 3.9 points, reaching 78.1 points. 18.3% of surveyed Kazakhstani citizens believe the economic situation in the country has improved, up from 16.4% in May. However, a significant majority (44%) still holds an opposing view.

Among age groups, the senior group over 60 showed notable improvement. The proportion of positively inclined respondents increased from 15.3% to 19.4%, ranking second among age groups. The youth under 29 continues to lead, with 21.6% selecting positive responses.

Regionally, the highest increase in positivity was observed in the Zhetysu region, where the share of positive responses grew by 11 percentage points to 21.8%. However, the largest proportion of optimists (29.9%) is found in the Turkestan region, significantly above the national average. The lowest proportion was reported in the Akmolinsk region, where it fell by 7 percentage points to 11.8%.

Increasing Willingness to Make Major Purchases

The second sub-index showing the most significant improvement compared to May was the assessment of the favorability of current conditions for major purchases. This indicator increased by 3.7 points, reaching 76 points, the best result in 22 months of data collection (the study in Kazakhstan has been conducted longer than in other countries). 32.5% of Kazakhstani citizens believe current conditions are favorable for major purchases, up by 2 percentage points from May. Conversely, 57.6% hold an opposing view, down by 2.7 percentage points from May.

Among age groups, the highest increase in optimism was again observed in people over 60. Among them, 27% gave a positive response, up from 21.1% in May. On the other hand, among youth under 29, optimism declined. In May, 45.8% indicated favorable conditions for current purchases, which dropped to 42.2% in June. Nonetheless, this result remains the highest among all age groups.

Regionally, the Mangystau region showed the best progress, where this indicator rose from 23.5% to 44.2%. In June, this share was the highest with a slight lead over the Turkestan region. Conversely, the Aktobe region experienced the most significant decline in positive responses, falling from 36.7% to 24.6%, making it the main underperformer of the past month.

Inflation Expectations Set Record Lows

Inflation assessments by Kazakhstan’s residents continued to decrease after the record lows in May. Last month, 39% of residents (down from 39.7% in May) noticed a significant rise in prices. This record low has been updated for the third consecutive month. However, the issue of significant price increases over the past year showed a more pronounced decline. The proportion of those noticing a faster-than-usual rise in prices dropped from 55.1% to 52%, setting a new record.

Inflation expectations among Kazakhstani residents slightly increased. The proportion of people expecting significant price rises over the next month remained at 16%, close to a record. On the other hand, slightly more people expect accelerated price increases over the next 12 months, rising from 19.2% to 20.9%.

A similar study by the National Bank of Kazakhstan on inflation assessments and expectations showed a similar trend. According to its data, the proportion of those expecting a significant price rise over the year increased from 24.9% to 26.4%. The same indicator for the next month also rose from 17.7% to 18.5%. However, inflation assessments for both the short and long term once again set multi-month lows.

Among specific goods and services, most respondents are still concerned about the significant rise in food prices. The list of notably increased categories remains unchanged: "Meat and poultry," "Milk and dairy products," "Bread and bakery products," and "Vegetables and fruits." However, fewer people noticed significant price increases for bread this time: 24.6% compared to 31.9% in May. Still, these food items continue to be among the top four concerns for Kazakhstani respondents for the past eight months. Overall, no significant increase in inflation perceptions for specific products was noted, except for the internet and communication services. For these services, the proportion of those noticing a significant price rise increased from 4.7% to 12.1%. There was a slight decrease and stabilization of similar indicators for utilities services at around 15–16%. According to official statistics, the average monthly growth of utility tariffs was only 0.2%, significantly lower than in the previous two months (0.9% and 0.7%).

Devaluation Expectations Surge in Kazakhstan

In June, devaluation expectations among Kazakhstani residents sharply increased compared to May, following a nearly 6% depreciation of the tenge against the dollar. According to the survey results, the share of Kazakhstani expecting a weakening of the tenge over the next year rose from 48.9% to 56.2%, and for the next month, from 29% to 36.9%. Both figures are close to record levels, with the first being just 0.2 percentage points below the record and the second 1.6 percentage points below. It is worth noting that previous records were set in September 2023, during a similar sharp devaluation of the tenge against the dollar.

Uzbekistan

In Uzbekistan, the consumer confidence index (CCI) in June 2024 shows a decline for the third consecutive month. However, the pace of the decline has slowed to just 0.9 points, resulting in a new record low for the CCI in Uzbekistan, now at 125.9 points. This decline occurred in only three of the five sub-indices. Nevertheless, significant drops in economic forecasts and assessments of personal financial situations outweighed the slight increases in two other areas.

Economic Forecasts Sharply Worsen

The sub-index for the forecast of economic changes over the next 12 months dropped by 3.6 points, setting a new record low and reaching 148.1 points. 61.4% of Uzbekistan’s residents believe the economic situation will improve, down from 62.8% in May. Among age groups, the youth under 29 showed the most significant deterioration in forecasts. If last month 63% of this group held positive views, in June this dropped to 60.7%. Overall, results across age groups were similar, ranging from 60% to 65%, with people over 60 leading at 65%. The lowest positive response was from respondents aged 30–44, slightly behind the youth at 60.4%.

Regionally, the most significant decline was observed in Surkhandarya region, where the proportion of positive responses dropped from 69% to 58.9%. The leading region this month was Namangan, with 68.6% of optimists. Tashkent, despite a slight increase from 48.2% to 51.2%, remains the lowest, lagging 5.1 percentage points behind the Syrdarya region.

Slight Decline in Personal Financial Situation

The second sub-index showing the largest decline in June was the assessment of changes in personal financial situation over the past 12 months. This sub-index fell by a more modest 1.8 points to 126.6 points, marking the second lowest value ever recorded. 53.8% of surveyed Uzbeks believe their personal financial situation has improved, compared to 56.9% in May. The worst dynamics among age groups were seen in those aged 45–59, where the proportion of positive responses fell from 51% to 47.3%, the lowest among all age groups. The youth under 29 remains the leader with 64.8% of positive responses, although this is 2.5 percentage points lower than in May.

Regionally, the largest change in results was in the Syrdarya region, where the share of people noticing an improvement in their personal financial situation dropped from 61.4% to 51%. However, Tashkent remains the lowest performer, despite a slight increase in positivity, with 47.5% positive responses, only slightly below Samarkand. The leading region this time was Khorezm, with 61.8%, a decrease of 3.4 percentage points from May.

Inflation Expectations Reach New Lows in Uzbekistan

Inflation expectations among Uzbeks continued their decline for the second consecutive month, with inflation assessments approaching March levels before the cancellation of the zero VAT rate. Over the past year, 44% of residents reported very high price increases, compared to 48.5% in May. In the past month, the proportion of those who noticed significant price increases fell from 27.7% to 22.2%. Inflation expectations also dropped significantly in both time frames, setting new absolute lows for the study. The proportion of people expecting a strong price increase in the next month fell from 13.2% to 10.5%, and those expecting a faster increase over the next year decreased from 28.1% to 24.8%.

Official statistics recorded a monthly deflation of 0.2% in June. However, annual inflation slightly accelerated from 10.55% to 10.6%. After a sharp rise in prices in May, June was much more lenient due to seasonal decreases in vegetable and fruit prices, which positively impacted residents’ sentiments. Vegetables fell by 13.9% month-on-month, and fruits and nuts by 4.8%. As a result, fruits and vegetables showed the most positive result ever recorded for the study, with only 17.2% of respondents noting their significant price increase, down from 23.6% in May and 43% in July of the previous year.

However, the previous month’s concerns, such as "Housing and Communal Services" and "Medicines and Pharmaceuticals," remain at the top. If 44.1% of residents noticed a significant rise in housing and communal services in May, this proportion reached a new record of 50.4% in June. For medicines and pharmaceuticals, the figure rose from 29.5% to 32.2%. The category "Meat, Poultry" remains in second place with a 42.2% share. Notably, there was a partial recovery in the share of those noticing a rise in gasoline and fuel prices, increasing from 19.4% to 23.2%, likely due to an 11.9% month-on-month increase in methane prices.

Sharp Drop in Devaluation Expectations

In June, devaluation expectations among Uzbeks continued to decrease, reaching record lows for the study. The proportion of those expecting the soum to weaken against the dollar over the next 12 months fell from 63.4% in May to 56% in June. The share of pessimists for the next month dropped from 43.5% to 35.7%. In June, the Uzbek soum continued to strengthen for the third consecutive month, a trend last observed two years ago, which positively influenced public sentiment.

Kyrgyzstan

In Kyrgyzstan, the consumer confidence index (CCI) in June showed growth for the fourth consecutive month. The growth rate accelerated, reaching 4.5 points, resulting in a record high of 136.6 points. All five sub-indices determining the composite CCI increased compared to May. Notably, the sub-index for the favorability of current conditions for major purchases rose substantially, exceeding the neutral threshold of 100 points.

Favorability of Conditions for Major Purchases Hits New Record

The sub-index for the favorability of current conditions for major purchases has been increasing for the fourth month in a row. For the second consecutive month, the growth was significant. If in April the sub-index was only 90.4 points, and in May 99.9 points, in June it reached 108.2 points. Kyrgyzstan now leads Central Asia in this regard, with the indicator setting a regional record for the study. 43.3% of residents see favorable conditions for major purchases, while only 34% hold the opposite view. In May, these shares were 38.2% and 37.8%, respectively. Among age groups, the most significant increase in June was observed among those aged 60 and over, whose positive responses rose from 32.5% in May to 39.3% in June, although this remains the lowest result among all four age groups. The highest optimism is still among the youth under 29, with 51.3% positive responses, up from 46.8% previously.

Regionally, the most significant increase in positive responses (from 27.4% to 50%) compared to May was observed in the Naryn region. However, the leader in June was the Jalal-Abad region, where the similar indicator reached 54%. The lowest results were again from Bishkek, where the proportion of positive responses fell from 32.3% to 31.4%. There was also a sharp decrease in optimism in the Talas region, from 48.9% to 36.6%.

Record Set for Personal Financial Situation Assessments

The sub-index for changes in personal financial situation in Kyrgyzstan increased by 4 points, reaching a record 128.4 points. The proportion of people with positive views on changes in their personal financial situation over the past 12 months increased from 47.1% to 50.2%. All four age groups showed increased optimism, with the most significant growth among those aged 45–59, where positive responses rose from 42.1% to 48.9%. The youth under 29 remains the leader, with 54.1% positive responses, up from 53.6%. The lowest result was from the 30–44 age group, with positive responses rising by 3.5 percentage points to 48.1%, but this remains the lowest among all groups. Notably, the other two groups are only slightly ahead of this group.

Regionally, significant growth was observed in the Osh region, where the share of respondents noting an improvement in their personal financial situation over the past year increased from 47.5% to 58.5%, the highest absolute result among regions. The lowest results were from Bishkek, where the similar indicator fell from 41.4% to 38.2%.

Inflation Assessments and Expectations Show Mixed Dynamics

In June, inflation assessments and expectations among Kyrgyzstanis displayed mixed trends, with new records reached for some 12-month metrics. While in May, 24.2% of respondents felt a very strong increase in prices over the past month, this figure rose to 25.6% in June. Conversely, assessments of price growth over the past 12 months decreased to a record low. In June, 44% of Kyrgyzstanis reported accelerated price increases, compared to 46.4% in May.

Official annual inflation data indicate a continued decline in June, from 4.6% to 4.5%, marking a record low since February 2020.

Inflation expectations among Kyrgyzstanis also showed mixed movements depending on the time frame. The proportion of respondents expecting faster price growth over the next 12 months fell from 12.3% to a record low of 10.9%. However, the share of those anticipating very strong price increases in the next month increased from 6.2% to 7.9%.

Among specific goods and services, flour remains the leader in price increases for at least the past ten months. However, the proportion of respondents citing flour decreased, reaching its lowest value for this period at 46.9%, down from 48.2% previously. The top five goods with the highest price increases remained unchanged for the tenth consecutive month. Besides flour, in June, 42.7% of respondents noted increased prices for vegetable oil, 37% for sugar and salt, 34.9% for vegetables and fruits, and 33.5% for meat and poultry. Prices for vegetables rose sharply by 9.2% month-on-month and for fruits by 3.5% month-on-month in June. Prices for the other mentioned goods remained nearly at May levels.

Devaluation Expectations at Record Lows

In June, the Kyrgyz som continued to strengthen significantly for the third consecutive month. The USD-KGS exchange rate fell by another 1.4%, making a total appreciation of 3.4% over the past three months. Such a low exchange rate was last observed in February 2023. This had a restrained impact on Kyrgyzstanis’ sentiments, with devaluation expectations slightly decreasing but still reaching record lows for the 12-month study. In May, 27.7% of residents expected the som to weaken within a year, while this share dropped to 25.6% in June. The proportion of pessimists expecting a weaker som in the next month fell from 15.9% to 14.9%.

Tajikistan

In June, the consumer confidence index in Tajikistan increased slightly from 146.1 to 146.8 points. Overall, the index has been stable over the past four months. However, some sub-indices showed mixed movements compared to May. The sub-index for the favorability of current conditions for major purchases saw the most significant increase, fully recovering from losses over the previous three months. Conversely, the other four sub-indices showed declines, notably the forecasts regarding the economic situation over the next 12 months.

Conditions for Major Purchases Recovered

The sub-index for the favorability of current conditions for major purchases increased sharply by 9.9 points in June, reaching 84.9 points, indicating nearly complete recovery from three months of decline. 41.7% of respondents gave positive responses, up from 37.3% in May. Improvements were observed across all age groups, with the most significant progress among those over 60. The proportion of optimists in this group rose from 33% to 42% over the month. However, the best responses came from the youth under 29, with a similar indicator reaching 45.4%. The other two age groups (30-44 years and 45-59 years) showed comparable results of 39.2% and 39.4%, respectively.

Regionally, a sharp recovery was noted in the Gorno-Badakhshan Autonomous Region, where the proportion of optimists rose from 21.2% in May to 55.2% in June. This region became the leader in June, having previously reached 54.4% in March. Other regions also saw improvements, with the most significant progress in Dushanbe (+8 pp) and the republican subordinated areas (+6.5 pp). However, the latter had the lowest results among all regions, with only 37.5%.

Slight Decline in Economic Outlook Expectations

On the other hand, forecasts regarding the economic situation over the next 12 months worsened compared to May. However, this sub-index fell only to 180 points, indicating strong optimism among respondents. The proportion of optimistic respondents in June was 84.2%, down from 87.4% in May. Decreased optimism was observed across all age groups, with the youth under 29 surpassing the older generation over 60 in optimism. In May, 89.6% of the youth expected economic improvements, but this dropped to 85.3% in June. The most significant decline was observed among those over 60, with their proportion falling from 90.7% to 81.9%, also lower than the middle-aged groups.

All regions showed a decrease in the proportion of residents expecting economic improvements over the next 12 months. Results were relatively uniform across regions. The leading Gorno-Badakhshan Autonomous Region had 86.1% optimists, while the republican subordinated areas had slightly fewer, at 82.7%. The most significant regression was in Dushanbe, where the proportion of positive responses dropped from 88.3% to 83.8%.

Slight Increase in Inflation Assessments and Expectations

Inflation assessments and expectations in Tajikistan slightly increased in June after record low results in April and May. The proportion of respondents noting strong price increases over the past month rose from 16.5% to 18%. Over the past 12 months, the share of those experiencing faster price increases fell from 22% to 21.4%.

Inflation expectations among Tajikistanis showed similar trends across different time frames. 7.1% of residents expect very strong price increases in the near month, down from 7.5% in May. However, the proportion of those expecting faster price increases over the next 12 months rose from 8.7% to 10.9%.

Official inflation data for June have not yet been published, but annual inflation slightly increased in May, from 3.4% to 3.6%. Among specific goods, Tajikistanis remain most concerned about flour prices. However, the proportion of such concerns decreased from 37.2% to 34.6% over the last month. Conversely, for meat and poultry, the share of those noticing price increases rose for the second consecutive month, from 33.5% in May to 34.3% in June. Similar dynamics were observed for vegetable oil, fruits, and vegetables. Thus, this quartet of goods remains unchanged at the top of the price increase rankings.

According to official statistics, meat and meat product prices increased by 0.6% month-on-month in May. In contrast, fruit prices rose by 5.4% month-on-month, with an annual growth rate of 21.3%, while vegetable prices fell by 4% over the month.

Devaluation Expectations Rise Despite Strengthening of the Somoni

In June, devaluation expectations in Tajikistan rebounded from record lows in May. Despite the somoni’s exchange rate against the dollar declining for the second consecutive month—by 0.8% in June following a 1.5% drop in May—public sentiment diverged from this trend. The proportion of those expecting the national currency to weaken within a month increased from 13.7% to 15.8%. Over a one-year horizon, 25.2% of the population anticipates a weakening of the somoni, up from 21.1% in May.

Conclusions

June 2024 was largely positive for Central Asian countries. In Kazakhstan, the Consumer Confidence Index (CCI) showed a notable increase, confidently surpassing the neutral 100-point mark for the first time since January. The greatest improvement was observed in the assessment of the national economic situation and the favorability of conditions for major purchases. While still a few points short of the November 2023 record, June’s result was the third highest in the 22-month data collection period. Additionally, Kyrgyzstan saw significant growth in its CCI, setting a new record and securing the second position in the region, surpassing Uzbekistan by over 10 points. This achievement was largely due to a new record in the favorability of conditions for major purchases. Now, the majority of Kyrgyzstan’s residents express positive views on this issue, setting an absolute record for the entire research period in Central Asia.

Tajikistan, the leader in the Consumer Confidence Index, remains stable, with the index holding steady at previous levels for the fourth consecutive month. A sharp recovery in assessments of conditions for major purchases was noted. Uzbekistan was the only country showing increased pessimism compared to May, with its CCI hitting a record low and falling for the third consecutive month. However, the decrease was modest, with two of the five questions showing increased positivity. Particularly notable was the worsening of Uzbekistanis’ forecasts regarding the economic situation over the next 12 months.

This all occurred against the backdrop of the removal of the zero VAT rate on utility services and medicines, which led to a recent acceleration in inflation. However, the seasonal decline in fruit and vegetable prices in June and overall monthly deflation likely contributed to the decrease in inflation assessments and expectations. These parameters improved significantly in Uzbekistan, nearly reaching March levels. In Kazakhstan, inflation parameters mostly showed a decline, though not strongly. The proportion of those noting accelerated price increases over the past year also dropped significantly, though not to record low levels. In Tajikistan, inflation assessments and expectations slightly worsened, but the growth was minor and not widespread, occurring after record lows in May. In Kyrgyzstan, inflation assessments and residents’ perceptions were mixed. A decline was observed only in questions with a one-year horizon, while there was increased pessimism about strong price growth over the next month.

Devaluation expectations in Central Asian countries also displayed mixed trends. While Kazakhstan and Tajikistan saw significant increases in devaluation expectations, Uzbekistan and Kyrgyzstan experienced decreases. Notably, in Uzbekistan, the proportion of people expecting the national currency to weaken in various time frames dropped sharply by 7.4–7.7 percentage points, reaching record lows. In Kazakhstan, despite the tenge weakening, 7.3–7.9 percentage points more people anticipate a stronger dollar. These expectations were slightly below the records set in September 2023, during another period of significant tenge weakening. In Tajikistan, devaluation expectations rose slightly from May’s lows, while the dollar showed weakening in the region (except Kazakhstan) by the end of the month. Against this backdrop, Kyrgyzstan’s devaluation expectations set new minima.

The twelfth wave of the consumer confidence survey across four Central Asian countries reveals the continuation of previously established trends. Kazakhstan continues its growth trajectory, which began in April, and now confidently remains in the positive zone. Tajikistan maintains its position for the fourth consecutive month. Uzbekistan’s CCI remains negative and now significantly lags behind Kyrgyzstan, where the index has reached new records. Ongoing acceleration of annual inflation in Uzbekistan may lead to further negative dynamics in the CCI. Similarly, the weakening of the tenge and its potential impact on inflation could play a similar role in Kazakhstan.

Daniyar Orazbaev, Analyst at Freedom Finance Global