Analyst says inflation increases problems in emerging markets like Kazakhstan

Rising food and fuel prices pose serious challenges for emerging countries, according to an economic risk analyst, who highlighted the mass protests taking place in Kazakhstan over fuel. Skyrocketed. “In particular, many countries are facing the challenge of increasing food and fuel prices as this also corresponds to supply chain constraints and many other issues,” said Rachel Ziemba, founder of Ziemba Insights, a research firm, said. “The challenge is that some emerging markets have already struggled to thrive even before and during the pandemic you’re seeing fiscal tightening and monetary tightening at the same time,” she said. As a result, countries in the region are struggling to distribute their wealth, Ziemba noted. This is especially true for a major energy producer like Kazakhstan. “Even for a country like Kazakhstan, which is an exporter of goods… they really struggle to distribute some of that income,” explains Ziemba.
The unrest began after the Kazakh government announced plans to lift price limits on liquefied petroleum gas, which is used as a regular fuel for cars in the Central Asian country. This decision has caused LPG prices to double.

While the government has reinstated price caps in an attempt to appease the public, the protests have continued and now take on a more political tone. Ziemba points out that Kazakhstan is one of many oil-producing countries that until recently were reluctant to pass on higher oil prices to their people. But “the way they do it is very awkward,” she said, adding that the government had not really responded to some of the other economic grievances.

“But it’s really not just food and fuel prices. These are also other grievances and real challenges associated with a thriving economy at a time when parts of government and the elite are doing very well,” she noted.