On January 5, 2022, after the Almaty authorities of Kazakhstan decided to lift the price ceiling of LPG, law enforcement officials from Kazakhstan gathered in a square to protest the increase in the cost of LPG.
Pavel Mikhayev | Reuters
An economic risk analyst pointed out that rising food and fuel prices pose a serious challenge to emerging market countries, and he pointed to the current large-scale protests Kazakhstan triggered by rising fuel.
“Many countries are facing the challenge of rising food and fuel prices, especially because it also coincides with supply chain constraints and various other issues,” said Rachel Ziemba, founder of research company Ziemba Insights .
“The challenge is that many emerging markets are already trying to grow even before the pandemic and throughout the pandemic… You will see fiscal and monetary tightening tighten at the same time,” she told CNBC’s “Squawk box Asia” on Friday.
Ziemba pointed out that, as a result, countries in the region are struggling with how to distribute their wealth.
This is especially true for a major energy producer like Kazakhstan.
“even if [a] A country like Kazakhstan, which is a commodity exporting country… It’s really difficult for them to distribute part of their income,” Ziemba explained.
The riots began after the government of Kazakhstan announced its plan to cancel the price ceiling of liquefied petroleum gas, which is a common fuel for automobiles in this Central Asian country. This has caused the price of liquefied petroleum gas to double.
Although the government has since restored the price ceiling in an attempt to appease the public, protests have continued and are now becoming more politicized.
Ziemba emphasized that Kazakhstan is one of many oil-producing countries that have been reluctant to pass on higher prices to its people until recently. But “in a sense, the way they did it was very clumsy,” she said, adding that the government did not really solve some other economic problems.
“But it’s really not just food and fuel prices. While certain parts of the government and the elite are doing well, there are other dissatisfaction and real challenges to economic welfare,” she pointed out.
— CNBC’s Natasha Turak contributed to this report