Union States Struggling to Stabilize Economy
Ex Union States Struggling to Stabilize Economy
How these 8 EX-Soviet Union States are Struggling to Stabilise their Economy Against the Dollar
Armenia is one of those countries that has been facing serious economic meltdown since the beginning of this year and its woes are not likely to end any soon going by the trends in their markets. Statistics reveals that Armenia has been suffering slow production growth with low household consumption and investments. This has been partly contributed at Russia’s’ economic slump on both investment and transfer of funds. However, economists project that Armenia’s economy will expand by at least 2.6% by the end of this year and 3.2% in 2017. Consequently, Armenian dram which is the country’s domestic currency isn’t doing fine against other external currencies with 482.241 AMD going at one US Dollar.
Earlier this year statistics revealed that Russian Ruble was one of the world’s worst performing currencies. Presently each dollar goes for 30 rubles a situation that is said to be detrimental to the economic stability of the country. This has, in turn, has caused a ripple effect on other several sectors of the economy and is partly blamed on oil issues.
Russian stock market is also recording poor performance as there no favourable transactions in stocks and bonds as well as on commodities and currencies. Maybe Russia is the most leveraged economy to the price of oil as it is being run conservatively from a fiscal outlook.
When Estonia became the first ex-soviet country to use Euro as its National currency in the year 2011 many critics claimed it would be the beginning of the problems in their economy. However, experts were surprised when the economy of Estonia grew by 7.6% just within that period of implementation. Since then Estonian Euro has maintained its strength in the financial markets and it's currently trading at 14.7425 per US dollar. This has lead strong economic growth in the country.
Early this year it was recorded that Ukraine’s national currency was gaining strongly on the US dollar which was partly attributed to the country’s good cooperation with IMF.
Its performance against the US dollar on the interbank foreign exchange as well as on the cash market has been significant with hryvnia gaining close 3% against the very dollar. It's National Bank (NBU) has been taking advantage of the situation to stock up its international reserves and investments.
The weakness of a currency sends signals of a bad economy especially for those country’s which depends on monetary policy. This is what has happened to Georgia which has suffered economic shock as a result of dwindling capital flows and fluctuations in the external demand for exports. Since the year 2000 Georgian Lira has been struggling to maintain a fixed exchange rate with US dollar and still struggles.
Even after reducing the monthly salary of most public servants Belarus economy hasn’t stabilised to the fullest as was expected. In most regions, average wages do not go past 350 USD this is significantly lower compared to 2 years ago when the wages were ranging from 500-650 USD. This has, in turn, affected the country’s economy with Belarus ruble struggling to compete against other foreign currencies at a very worrying strength.
In the world's financial markets Moldovan Leu has been recording weak trend against the dollar in the past few months and this has brought worry about the future economic standing of the country. Most currency dealers have however pointed out that the outflow of investment from developing countries markets and their transitions into US finance security is the source of all the troubles in Moldovan finance markets. However, this situation is expected to end by the end of this year.
In as much as Kazakhstan Tenge has been doing well in the finance markets in the recent past, but it's feared that this stability could be short-lived due to uncertainty in their relations with their close allies in the oil trade. Unfortunately, this uncertainty has set in even after Kazakh government liberalised the exchange rate of the country’s currency which consequently led to the depreciation by approximately 26%. This depreciation is however expected to have positive impacts but will not resolve socio-economic problems of the country.