Baku, Azerbaijan, Oct.9
By Nargiz Sadikhova - Trend:
Real GDP of Kazakhstan grew by 4.1 percent in 1H2019, reflecting robust growth in household and business spending, Trend reports with reference to the latest World Bank Economic Update for Europe and Central Asia.
According to the information, after providing a substantial addition to GDP in the last two years, the contribution of net exports faded on account of surging imports.
“Private consumption expanded by an estimated five percent in 1H2019, supported by higher wages and social benefits and increased bank lending. Investment increased by 3.4 percent. On the supply side, growth was mainly supported by non-tradable services while the contribution of mining remained moderate compared to previous years,” the report said.
The current account deficit widened to 2.7 percent of GDP in January-June 2019 from 1.8 percent a year earlier, as higher domestic spending boosted imports and lower oil prices squeezed exports, the report said.
“Net inflows of foreign direct investment, mostly in the mining sector, fell to 4.4 percent of GDP from 5.6 percent a year earlier. With net capital inflows failing to offset the current account deficit, net international reserves declined to $27.7 billion by the end of June (down from $30.9 billion at end-2018). The weaker performance of the current account put pressure on the tenge, which fell to a historic low,” the statement said.
Higher revenues largely offset stepped-up spending to keep the deficit of the general government budget at about 0.3 percent of GDP in the first half, little changed from a year earlier, WB noted.
“Revenues increased on account of improved tax administration and a weaker tenge. In the second half— and for 2019 as a whole—fiscal policy is likely to be more expansionary because of increased social spending, higher wages for low-paid public sector workers, housing and debt relief for low-income earners, and infrastructure investment. Public debt is expected to fall to 19 percent of GDP (from 20.7 percent in 2018),” the report said.
Furthermore, although the government supported the banking sector through several bailouts, the industry remains fragile.
“The central bank plans to conduct an asset quality review of banks in late 2019. The officially-reported ratio of non-performing loans was 9.4 percent in June 2019. A contraction in corporate lending was more than offset by increased lending to households, partly reflecting the government’s program of providing subsidized loans to households,” WB concluded.
---
Follow the author on twitter: @nargiz_sadikh