KAZAKH ECONOMIST EXPECTS A SECOND WAVE OF GLOBAL CRISIS

A second wave of crisis is going to hit the global economy, says Olzhas Khudaibergenov, the director of the Kazakh Center for Macroeconomic Research.

“A lot of people think that the crisis is over and the economies will resume their growth. In fact, it will not happen and there will be a second wave of crisis,” the expert told Interfax-Kazakhstan in an interview in mid January.

Mr Khudaibergenov’s pessimistic expectations are based on the fact that the governments have started winding down their crisis response programs, and the USA is playing here the first fiddle.

The Kazakh expert reminds that in October last year the U.S. first tried to curtail their anti-crisis expenditures and the market immediately responded with a 5-10% fall. The American government called such attempts “a test” and decided to postpone them until the end of the last year and the beginning of this year. “In other words, in three months (December 2009, January-February 2010) the crisis response programs will be cut down by 90% and in March and June by the remaining 10%,” Mr Khudaibergenov said.

According to him, in February, when the governments almost close their crisis response programs, the stock and commodity markets will start shrinking. Mr Khudaibergenov also pointed out to the fact that a decline in the real sectors had been slow before October and became steep after it.

He believes that very little of the monies the governments allocated for their crisis response programs have actually come into the real sector. All developed economies are cutting down on financing their businesses and physical persons, this tendency being especially strong in the U.S. and the UK. However, one way or another these monies reached the stock and raw material markets and caused an abrupt speculative increase in the indices and quotations which will now go down, when not financially supported any more, Mr Khudaibergenov believes.

The fact that the Dollar is becoming stronger means that a second wave of crisis is imminent, the Kazakh expert reckons.

“A shortage of liquidity was a problem in fall 2008 and still is a problem. However, it is the Central Bank of the U.S. that benefits from the situation,” Mr Khudaibergenov said. He also remarked that “the Dollar has been getting stronger during the crisis.”

The closure of the crisis response programs will affect the oil prices, the expert believes. “This year the oil price will drop to 30 dollars per barrel,” he says.

Mr Khudaibergenov expects that the oil prices should start falling as the crisis response programs are being wound down.

The expert believes that 2010 will be a year of great disappointment.

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