Weekly review. You may not be interested in ?finance? but ?finance? is interested in you

Astana. February 20. KAZINFORM / Balym Issenova / Leon Trotsky once said: ?You may not be interested in war but war is interested in you.? The same is true in point of finance. All nations and people have felt the effects of the global financial crisis. Especially for this reason our Agency has made much of it lately. In this review I would like to pool our coverage on this topic refering to the view of a member of the Council of Economic Advisers, PhD in math and physics Kanat Ospanov which he shared with our correspondent.

The scientist highlights that the anti-crisis measures taken by the Government of Kazakhstan, must be, above all, a clear understanding of the causes and dynamics of the developing world crisis. That is a common strategic vision for the country's economic development and a clear understanding of the long-term effect of these measures. Considering the origin of the crisis, the economist believes that the reason of it was the deindustrialization of American economy and the loss of competitiveness, especially in competition with Asian countries such as China and Southeast Asia. In his view, this process took place gradually; starting with the 80s of the 20th century, but its acceleration is connected with the collapse of the socialist world. With the fall of ?iron curtain? Western capital had flown to cheap Asian labor market. The world economy entered a new stage. In 90s, with the help of imported technologies to the Asian countries, the USA started mass production of western standard and quality at the lower cost. In fact, industry shifted to Asia, particularly to China. Today, this country is recognized as the global factory. In Kanat Ospanov?s opinion, we can not decry the role of the American economy in the 20th century. As a matter of fact, the USA was an engine of world economy. ?America pulled the world economy - in fact on both sides. First, introduced innovation and new technological solutions (transistors, microchips, personal computers, internet, etc.). This is a wide range of goods and services, which then spread to the whole world and had a huge consumer demand. These innovations promoted not only the American economy, but also the world?s, the economist thinks. Secondly, the U.S. economy itself was in great demand, ensuring the rise of the Japanese economy in the 50-60's, South Asian in 70-80s, and then that of Chinese, i.e. the American economy became the groundwork of the Asian ?economic miracle?. Today the whole world gives mind to the question why the U.S. economy came to the current financial and economic crisis? K. Ospanov?s analysis shows that the U.S. economy was not able to generate such innovations that would have contributed to the economic growth and could have served as the economic equivalent of trade with the same Asian countries. In this case, the United States simply began getting rid of its dollars that were not secured by the real economy, and dollars ?settled down? in Asian countries. In fact, the entire American economy had to live in debt. It was some kind of financial pyramid. As a result, the mortgage crisis broke down in August 2007. This was followed by the crisis in the entire financial sector of the United States, which caused a chain reaction throughout the global financial system. The financial crisis experts are unanimous in their opinion, that American economy can not be resolved quickly, it will require at least 2-3 years to recover. Thus, returning to Kazakhstan, the scientist stresses that it is a part of the global economy and it should be understood that the crisis will be long. The second fact, which is important, is that the world economy will increase protectionism. Countries will protect their domestic markets, population, and there will be the dominance of policy of economic selfishness. And Kazakhstan is to clearly understand this situation. Next, that is important in the economist?s view is the fact that the U.S. economy lowered demand for raw materials that influences lives of Kazakhstani people. Kazakhstan?s main export articles are petroleum, metals, gas, uranium - the demand and prices for which have already fallen. It means that sectors that had been a stronghold of the Kazakh economy in the next five to ten years will not be able to fulfill this role. K. Ospanov?s view is that in the coming years these branches of industry could have serious problems, so our country has to look for new strategies and the locomotives of growth. In recent years, it have been the real estate sector. But, this financial pyramid collapsed. Today, the building industry has gone into stagnation, and its revival will be slow and gradual. According to K. Ospanov?s view on anti-crisis program of the Government, AFN and National Bank, it includes the actions necessary in the current situation, but has a serious drawback - absence of strategic frameworks and visions. ?So far, there is no clear picture if the money poured into the economy will bring a real effect. How much money taken from the National Fund will go abroad in the form of payments on external debt?? In scientist?s view, the answers are not yet clear. ?We know that Kazakh banks give serious charges. The state bought the controlling stake of two system forming banks, and it has to assume the obligations of their external payment?, he said. ?Mistakes are very expensive. Of course, it was a strategic error to allow the creation of financial pyramids in construction. The banks took huge foreign loans, increasing external debt?, the economist says. Therefore, Kazakhstan has to think about the post-crisis period. First, look for new engines of growth in those sectors that produce goods of final consumption. This is vital because in the commodity sector profitability sharply falls and outflow of capital, personnel might take place. Objective reasons will make the economy more actively search for other non-primary sectors. For example, our country has good potential in the agricultural sector. But it also requires a very clear strategy for its outlining. Furthermore, Kazakhstan has great potential in the production of leather and leather articles. This is one of the interesting areas that might successfully develop in Kazakhstan, despite the competition from Chinese manufacturers. To do this, there is a major source of raw materials. In Russia the market of leather shoes is 20 billion dollars a year. Kazakhstan is working in the same economic space with Russia and Belarus. It is a great advantage. This is a serious market for us, we need to master and conquer it. The economist is convinced that today the government should make an addressed investment and support domestic producers to reach a certain position in the production of goods with high added value. There is a need to monitor such products and to reorient the economy to solve specific problems in a new crisis of 2009-2010.This strategic reorientation should be on time and quick. In this case, a lot depends on the state authorities. Business will not be able to win those markets all alone. The economist also shared his views on devaluation of the national currency. According to him, it was inevitable. The level of devaluation of the ruble to the dollar from July 2008 to February 2009 amounted to 55%, inflation of Ukrainian hryvna was 73%, the Turkish lira devalued by 35%, Kazakh Tenge - by 25%, which is a relatively modest figure. The devaluation of tenge is important now for exporters from the mining sector, because the level of prices in the commodity sector is quite low. But devaluation can not be a permanent economic instrument. Once again, that needs a new strategy for survival and development of Kazakhstan in the context of long-term global economic crisis, K. Ospanov concluded.