BAKU, Azerbaijan, May 31. The sanctions imposed against Russia will lead to slowdown of economic growth in Kazakhstan, the Eurasian Development Bank (EDB) told Trend.
According to the bank, Kazakhstan's GDP will grow by 2.5 percent in 2022, down 1.5 percent from the previous forecast.
"The secondary effects of restrictions against Russia will affect the slowdown in economic growth, mainly in trade and investments, in Kazakhstan. We can expect a slowdown in output in the mining and manufacturing industries, because about half of Kazakhstan's exports to Russia are metallurgical products. The effect of the reduction in economic activity in Russia can amount to nearly 0.8 percent of GDP growth,” the bank said.
Besides, the bank predicted an additional constraining effect from a slowdown in global economic growth on Kazakhstan's exports, which will reduce its GDP growth by 0.5 percent.
"Direct and indirect losses due to problems with international transportation can amount to 1.1 percent of Kazakhstan's GDP growth. Oil production forecast revision can equal 0.3 percent of GDP growth losses. Investment activity in the country is more likely to weaken,” the bank noted. “"EDB Monitoring of Mutual Investments” report has indicated Kazakhstan as the main recipient of Russian direct investments among the EAEU [Eurasian Economic Union] member countries. Tightening monetary policy in response to accelerated inflation will slow down lending rates.”
Besides, according to the bank, consumer activity in Kazakhstan is expected to decline against the backdrop of a decline in real money incomes.
“The economy can be supported by high oil prices and the implementation of structural reforms. In 2021, reform priorities were reformulated as part of a number of national projects aimed at diversifying the economy, transforming the labor market, developing the private sector, regional development and digitalization,” the EDB also noted. “Given the indicated factors of decline and growth, Kazakhstan's GDP will rise by 2.5 percent by the end of 2022. GDP growth is also projected to speed up in 2023 after commissioning of new facilities.”
“ In 2023, oil production in Kazakhstan is expected to grow by 8.1 percent as a result of the Tengiz field expansion project. By the beginning of 2023, the negative impact of geopolitical risks in the global economy will decrease, returning the non-oil sector of Kazakhstan to sustainable growth rates,” the bank further said.
As a result, Kazakhstan's GDP is projected to increase by 4.8 percent. In the medium term, the foundations of economic growth are expected to strengthen due to the implementation of structural reforms aimed at diversifying the economy, increasing household incomes and living standards, added the EDB.