Kazakhstan's economic growth is expected to accelerate in 2022 - Renaissance Capital

Business 18 January 2022 17:21 (UTC +04:00)
Kazakhstan's economic growth is expected to accelerate in 2022 - Renaissance Capital

BAKU, Azerbaijan, Jan. 18


Economic growth in Kazakhstan is expected to accelerate this year, exceeding five percent on annual basis, Renaissance Capital Investment Company told Trend.

The company also anticipated 2021 GDP growth to make up four percent instead of initially forecasted 5.3 percent (this indicator lowered by 2.6 percent in 2020), adding that its macroeconomic forecasts for most of the CIS+ countries are confirmed or even upgraded.

According to Renaissance Capital, there are three main reasons behind insufficiently high growth rates in Kazakhstan:

1) New quarantine restrictions amid the COVID-19 pandemic which have been stricter than in other CIS+ countries;

2) Stalling activity in the oil and gas sector which failed to increase production despite easing OPEC+ quotas amid disruptions in some oil fields;

3) Insufficiency of fiscal stimulus for the population to compensate for negative aftereffects of COVID-19 pandemic.

“The latter is in contrast to Russia, which enjoyed a warm pre-election stimulus in 2021. As a result, the Kazakh population may have felt deceived by the fact that the increase in global fuel prices – traditionally associated with growing income and a strong tenge – brought nothing but an increase in domestic fuel prices,” Renaissance Capital said.

The hike in gas prices made the country citizens take part in the protest actions, the company added.

Moreover, as the company noted, the COVID-19 pandemic crisis deepened social disparities hitting primarily the low-income citizens and those employed in the shadow economy, which, based on official estimates, accounts for above 20 percent of GDP.

According to the World Bank, Kazakhstan’s poverty rate reached 12-14 percent in 2020 compared to only six percent in 2016.

Official Kazakh estimates are more modest in assessing the level of poverty in the country, but also show its growth in recent years.

“The disgruntled low-income population appears to have been the main impetus behind the protests. On the positive side, we note that the average wage in Kazakhstan showed double-digit growth in the past three years. We believe that this means the average person in the street is unlikely to be disgruntled with their level of income,” the company said.

Besides, the expected acceleration of economic growth above five percent will be supported by fiscal stimulus and oil production increase by nearly five percent added the company.