BAKU, Azerbaijan, Mar. 16
By Nargiz Sadikhova - Trend:
Kazakhstan’s National Bank has revised the country’s economic development forecast for 2021 and 2022, Trend reports citing the Bank.
The Bank said that the negative impact of the COVID-19 pandemic on the economy of Kazakhstan is gradually weakening. An improvement in the epidemiological situation and a softening of quarantine measures is observed in many regions of the country. After a significant deterioration in economic indicators in 3Q2020 and 4Q2020, a recovery in consumer demand and business activity in both the manufacturing of goods and the provision of services was observed.
However, signs of economic recovery observed in the final months of 2020 weakened in January 2021 and the country’s GDP contracted by 4.5 percent. The main reason for the GDP contraction was due to lower output in the mining industry, trade, and transport.
In the updated baseline scenario, the Bank revised the estimates for the growth rate of the economy of Kazakhstan in 2021 to be 3.4–3.7 percent as compared to the previous forecast of 3.7–4 percent.
The economic recovery is expected to be driven by consumer demand increase.
“Its growth will be ensured by an increase in real incomes of the population and wages and the recovery dynamics of consumer lending. Investment demand will also recover. This will be due to the implementation of investment projects in the oil and gas industry, government anti-crisis programs and the general growth of business activity in the real sector, as the epidemiological situation improves,” the Bank’s forecast said.
Furthermore, short-term inflation forecasts under the baseline scenario have increased as a result of the continued increases in price for food items. Nevertheless, in the absence of imbalances, inflation will decline and by the end of 2021 will be around 4-6 percent, continuing to downgrade in 2022.
A gradual slowdown in the growth of prices for food products is also forecast. A gradual decline in world food prices is also expected from 2H2021 as the harvest of the new agricultural season 2021–2022 will start.
At the same time, the disinflationary effect of the non-food and services sector will gradually be exhausted as domestic demand expands. At the same time, the dynamics of demand recovery will depend on the epidemiological situation, recovery of economic activity and further improvement of the situation on the labor market.
Against this background, the Bank expects some acceleration in the growth of prices for non-food products and paid services.
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