Baku, Azerbaijan, Oct. 20
By Ali Mustafayev – Trend:
Kazakhstan's economic activity will continue to be driven by the country's extractive industries, with the oil and gas (60 .0 percent of total exports in 2016) and mining sectors (iron and copper accounting for 12.5 percent of total exports) remaining the main contributors to headline GDP growth, according to the report of BMI Research.
In the first half of 2017 real gross value added in mining and quarrying accelerated by 9.8 percent, compared to a 3.1 percent contraction in the previous year, said the report.
This uptick reflected a combination of higher prices and rising production in the oil and gas and mining sectors and we expect these favorable dynamics to persist, although year-on-year price and production gains will somewhat weaken over the next two years, BMI Research forecasts.
“Our oil price and Kazakh hydrocarbon production outlook is relatively subdued, with our Oil and Gas team forecasting an average 8.5 percent y-o-y rise in oil prices and a 1.4 percent rise in hydrocarbon production over the next two years , compared to the respective uptick of 18 .8 percent and 9.7 percent we estimate for 2017," said the report.
"In a similar vein, our Commodities team also projects copper prices to ease from 2018, whilst Kazakh copper production in volume is set to contract by 0.4 5 percent on average over the next two years. These forecasts imply that the mining and quarrying growth rate will somewhat moderate, leading to a concurrent moderation in GDP growth,” according to the report.
Following a strong rebound in 2017, Kazakh real GDP growth is expected to moderate slightly over the next two years, as base effects of lower commodity prices and domestic demand struggles to recover. Over the longer term there is a significant upside from China's Belt & Road initiative and the Kazakh government's privatization program.