BAKU, Azerbaijan, April 11. Real GDP growth in Kazakhstan is expected to slow to 1.5-2 percent in 2022, said the World Bank’s latest Economic Update for the region, Trend reports citing the report.
The bank said that spillovers from Russia’s economic collapse will disrupt Kazakhstan’s supply chains and dent its growth prospects.
“Kazakhstan also relies on Russia for 40 percent of its imports. Trade disruptions, lower business confidence, and increased currency volatility will also lower growth. Growth will also be lower due to the closure (due to storm damage) in March of Kazakhstan’s main oil pipeline (to Russia’s Black Sea), through which about 80 percent of Kazakhstan’s oil is exported. Based on current repair timeframes (up to a month), oil export volumes could fall by about 5-6 percent in 2022,” the report said.
The World Bank added that further exchange rate depreciation, rising food prices, and wage increases will keep inflation high in 2022.
“Monetary policy is expected to remain tight in response. Fiscal policy will continue accommodating public spending to improve household welfare and sustaining the business environment. Measures include increased social assistance, rental subsidies, and compensation for businesses affected by the January protests. A small current account balance is projected in 2022, supported by higher oil prices and lower demand for imports,” the report added.
The Bank noted the national poverty rate is projected to fall to 12.0 percent by end-2022, though this may change if inflation is higher and growth slips further.
“These projections bear significant downside risks: spillovers from sanctions that further weaken trade flows and investor confidence; more prolonged suspensions of Black Sea oil exports; risks of wage-price spirals linked to economywide wage increases, and potential capital flight amidst heightened uncertainty and tighter global financial markets. Events since January clearly urge faster progress on reforms to achieve sustainable growth and shared national prosperity. In that regard, the authorities plan to take a stronger stand against corruption and improve the rule of law, having announced steps to increase competition and the quality of human capital, and address government inefficiency,” the report said.
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