BAKU, Azerbaijan, Nov. 26
By Nargiz Sadikhova - Trend:
Kazakhstan’s GDP is expected to return to its pre-COVID crisis level no earlier than by mid-2021, forecast of Eurasian Development Bank (EDB) said, Trend reports citing EDB.
The EDB’s base forecast says that Kazakhstan’s GDP will grow by 4.4 percent in 2021, and by 4.2 percent in 2022.
The EDB said the volume of Kazakhstan’s fiscal stimulus in 2021 will remain approximately at the level of that in 2020, and in 2022 the budget deficit will decrease to 2.5 percent of GDP. Government development programs are also expected to contribute to economic recovery.
“Easing of monetary policy projected in 2021, as well as increased business activity abroad, including in Russia, will provide additional support to the economy of Kazakhstan in 2021–2022. As a result, according to EDB estimates, the pre-crisis level of GDP (4Q2019) will be reached in mid-2021,” the report said.
EDB added that growth rate of the consumer price index at the end of 2021 is expected to be 5.3 percent year-on-year.
“Decrease in inflation will be facilitated by the exhaustion of pro-inflationary factors in 2020 (weakening of the tenge, rush demand, a decrease in production in certain sectors of animal husbandry, an increase in world food prices). In 2022, inflation is projected at 5.2 percent year-on-year, while the disinflationary impact of weak domestic demand will gradually weaken,” the report said.
The EDB's baseline forecast assumes normalization of the epidemiological situation in the country and the world, which will be accompanied by a decrease in devaluation and inflation expectations.
“Given the fact that the economy will continue to function below its potential in the next two years, this will require further easing of monetary policy. As the economy approaches equilibrium levels, interest rates on the interbank credit market will adjust to neutral levels. Kazakh national currency is currently undervalued in relation to the currencies of major trading partners-countries, including the US dollar. Correction of the course to the equilibrium level is expected during 2021. In nominal terms, the Kazakh national currency will continue to weaken at a moderate pace (about 1-2 percent per year), mainly due to higher inflation in Kazakhstan compared to trading partner countries,” the report said.
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