Kazakhstan Inflation Expected to Ease in 2027 Despite Higher Spending

The National Bank of Kazakhstan expects inflation to slow in 2027, but less sharply than previously forecast. In September, it raised its forecast to 6.5%–8.5%, up from 5.5%–7.5%, amid concerns about government spending and other pressures. Akylzhan Baimagambetov, the bank’s deputy governor, said on November 5 that the forecast already reflected most of the expected impact of a new government spending program and a planned minimum wage increase from 85,000 to 110,000 tenge ($188 to $243) in January 2027. Kazakhstan announced its People’s Construction program on October 28 to build and upgrade schools, hospitals, local roads, and utility networks. The government plans to draw about 6.5 trillion tenge ($14.4 billion) from the National Fund for the program through the end of 2029. In its September forecast, the bank had assumed withdrawals of 5 trillion tenge ($11.1 billion) from the fund for major projects in 2027–2029. The government said it had approved 262 projects, with a combined cost of 1.5 trillion tenge ($3.3 billion). It plans to draw up a list of specific projects covering every region by the end of 2026. Annual inflation slowed to 9.2% in October from 9.3% in September and 9.8% in August, according to Kazakhstan’s Bureau of National Statistics. In the bank’s September household survey, respondents expected prices to rise 11.8% over the next 12 months, down from 12.1% in August. In a separate October survey of analysts, the median forecast for 2027 inflation fell to 8.3% from 8.5% in August, but remained near the upper end of the central bank’s forecast range. For 2028, analysts expected 6.9%, down slightly from 7%, compared with the bank’s projection of inflation close to its 5% target. Baimagambetov said the bank and the government were updating their measures to curb inflation, focusing on sectors where supply fails to keep pace with demand. In March, the government discussed support for dairy processors and discounted grain and flour for bakeries. Alongside monetary policy, the central bank uses banking regulations to slow growth in consumer lending. On October 23, it cut its base rate from 16.25% to 15.75%, its fourth consecutive reduction since June. The bank indicated that it could hold the rate at that level through the end of the year. It will announce its next rate decision on December 4.