Kazakhstan’s economy forecast to expand, EBRD says

Business Materials 4 November 2021 11:29 (UTC +04:00)

BAKU, Azerbaijan, November 4

By Nargiz Sadikhova - Trend:

Kazakhstan’s economy is forecast to expand by 3.6 percent in 2021, Trend reports citing the Regional Economic Prospects report by European Bank for Reconstruction and Development (EBRD).

Country’s real GDP grew by 3.0 percent year-on-year in the first eight months of 2021. Recovery was enabled by fiscal support measures and expansion in private consumption.

“Growth in real wages and consumer lending together with stimulus measures benefited household demand. Fixed investment remains sluggish due to the contraction in the mining sector but has been growing outside of mining. Inflation rose from 7.5 percent year-on-year in December 2020 to 8.9 percent year-on-year in September 2021, fed by rising international food and commodity prices, as well as consumer demand supported by social transfers and other stimulus measures,” the report said.

Real estate prices surged, driven by increased mortgage lending and people spending down their retirement savings (allowed from January 2020).

“Credit growth accelerated to 16 per cent year-on-year in August 2021 from 8 percent a year ago. The central bank responded to inflationary pressures by hiking the policy rate stepwise from 9 to 9.25 percent in July 2021 and to 9.5 percent in September 2021. Preliminary estimates show that, in January to June 2021, the current account was in deficit of $ 1.7 billion compared with $0.8 billion a year ago,” the report said.

As noted in the report, this is due to a surge in net investment income payments made to foreign direct investors (up by 43 percent year-on-year) and growing consumer goods imports (27 percent year-on-year). Exports of goods rose by only 12 percent year-on-year in the first seven months of 2021, driven by non-oil exports.

“The economy is forecast to expand by 3.6 percent in 2021 and 3.8 in 2022. Growth will be led by stronger external demand and continued fiscal stimulus measures supporting domestic consumption. Downside risks relate to the Covid19 pandemic continuing to disrupt trade and economic activities,” the report added.


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