Baku, Azerbaijan, Oct.9
By Nargiz Sadikhova - Trend:
Kazakhstan’s economic activity is estimated to have slowed modestly in 2019 on account of softer exports (including hydrocarbons), Trend reports with reference to the latest World Bank Economic Update for Europe and Central Asia.
According to the report, Real GDP of Kazakhstan grew by 4.1 percent in 1H2019 and it is likely slow further in 2020, reflecting the impact of stagnant oil production and sluggish demand in Kazakhstan’s main trading partners, as well as the diminishing effect of the fiscal stimulus on domestic demand.
“Household spending and investment will drive demand, although to a lesser extent than in previous years. On the supply side, growth is expected to be supported by non-tradable services,” the report said.
Weak manufacturing output, owing to lackluster foreign direct investment and the limited participation of domestic companies in global supply chains, will weigh on economic performance, WB said.
As noted in the forecast, the draft state budget for 2020 envisages a deficit of 2.1 percent of GDP, relatively unchanged from the 2019 budget, before a steady decline in subsequent years. The budget includes additional spending on social assistance, infrastructure, and subsidies to small and medium enterprises.
“Increased spending will need to be offset by higher revenues. The authorities plan to start reducing the non-oil fiscal deficit in 2020, with a goal of reducing it to about 5.4 percent of GDP by 2022,” the report said.
The current account deficit widened to 2.7 percent of GDP from January to June 2019 from 1.8 percent a year earlier, the report said. Furthermore, lower oil prices and higher domestic demand for imports are expected to keep the current account in modest deficit over the medium term.
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