BAKU, Azerbaijan, May 13
By Nargiz Sadikhova - Trend:
Kazakhstan’s economy will contract by 3 percent in 2020, the latest forecast of the European Bank for Reconstruction and Development (EBRD) said, Trend reports with reference to the EBRD.
The EBRD report said that Kazakhstan’s real GDP growth accelerated from 4.1 to 4.5 percent in 2019 on the back of rising private consumption and fixed investment. With the state of emergency due to the coronavirus declared only on March 16, the economy continued expanding in the first three months of 2020, adding 2.7 percent year-on-year.
“Retail trade, transport and hospitality industries were the first sectors to be affected by the lockdown, seeing negative growth already in the first quarter. Social distancing measures, partially eased since late-April, will remain in place at least until mid-May 2020, wreaking havoc on the service industry and the small and medium business (SME) sector in particular,” the EBRD report said.
In parallel, the economy is strongly affected by lower commodity prices, and the planned cuts in oil production, in line with Kazakhstan’s OPEC+ commitments, the report said.
As a result, the report said, Kazakh national currency (tenge) came under strong pressure and lost 11 percent of its value in the first four months of the year. On the positive side, Kazakhstan has sufficient fiscal space and international reserves to support businesses and domestic demand, the report said.
“The banking sector is liquid, and lending to the economy is mainly constrained by a perception of elevated risks. The government reacted to the crisis with a $13 billion (9 percent of GDP) stimulus package providing support to the affected businesses and households,’ the EBRD said.
The EBRD said that in order to address short-term liquidity needs in the SME sector, Kazakhstan’s government and the central bank are offering loans at concessional terms as well as tax, utility and loan repayment deferrals.
“The change in relative prices could also create the conditions for diversifying the economy away from excessive dependence on the gas and oil sector. Overall, we expect the domestic demand to reach its pre-crisis level only by mid-2021, leaving the economy on a lower growth trajectory,” the forecast said.
The EBRD forecasts that Kazakhstan’s economy will contract by 3 percent in 2020, followed by a 5.5 percent rebound in 2021, supported by a partial recovery of oil prices.
The EBRD is the largest international investor in the country’s economy outside of the oil and gas sectors and has a wide presence in Kazakhstan, with two Resident Offices in Nur-Sultan and Almaty as well as five local offices for outreach in remote areas of the country.
On March 15, 2020, Kazakhstan’s president signed a decree introducing an emergency state in the country due to the coronavirus outbreak, which came in force on March 16 and was to last till April 15, 2020.
Later, by a decree of Kazakhstan's president, the emergency state period in Kazakhstan was extended till May 1, 2020, and then till May 11, 2020.
The first two cases of coronavirus infection were detected in Kazakhstan among those who arrived in Almaty city from Germany on March 13, 2020.
The total number of coronavirus cases confirmed in Kazakhstan since the virus was first confirmed in the country amounted to 5,417 cases. This includes 2,223 people who recovered from the coronavirus, and 32 patients who passed away.
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