NUR-SULTAN (TCA) — Kazakhstan’s economy will continue to grow at a level close to potential figures, according to a macroeconomic review for Kazakhstan published by the Directorate for Research at the Eurasian Development Bank (EDB).
The review states that Kazakhstan’s GDP growth will speed up to 4.2% in 2019 driven by recovered outputs in metallurgy, as well as higher consumer and investment demand. Compared to the previous forecast (April 2019), the estimate was increased by 0.9 percentage points to reflect, in the first place, the effects of higher than expected recovery of oil production volumes after scheduled repairs at the Kashagan oil field had been completed. Andrey Falileyev, Director for Research at the EDB, believes that Kazakhstan’s economy will grow by an average of 3.5% a year in 2020-2021.
Inflation is expected to remain within the targets (4.0-6.0% as at the end of 2019) despite its acceleration because of the impairment of the tenge, increased world’s food prices, and expanded domestic demand in the second quarter of 2019. The medium-term inflation rates are forecast to be around the National Bank’s targets.
According to the EDB analysts, the Kazakh National Bank’s base rate will be maintained at a level of 9.25% until the end of 2019. Andrey Falileyev suggests that the base rate may be reduced in the medium term as inflation will stabilise around the targets.
The main risk for Kazakhstan’s economy, as stated in the review, is the possible worsening of the external environment should the trade conflict between the U.S. and China develop further. If the unfavourable scenario materialises, it will affect economic growth, primarily through foreign trade and investment. In addition, the country’s economic development rates may be affected by fluctuations in outputs in some of the key sectors such as oil and gas, mining and metallurgy, or agriculture.
The Eurasian Development Bank (EDB) is an international financial institution founded by Russia and Kazakhstan in 2006 with the mission to facilitate the development of market economies, sustainable economic growth, and the expansion of mutual trade and other economic ties in its member states. The EDB’s charter capital totals US $7 billion. The member states of the Bank are Armenia, Belarus, Kazakhstan, the Kyrgyz Republic, the Russian Federation, and Tajikistan.
