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Kazakhstan's GDP growth may slow down given oil & gas production reduction

Oil&Gas Materials 3 April 2020 12:24 (UTC +04:00)
Kazakhstan's GDP growth may slow down given oil & gas production reduction

BAKU, Azerbaijan, Apr. 3

By Nargiz Sadikhova – Trend:

Kazakhstan’s economic growth is forecast to remain positive in 2020 despite the coronavirus outbreak in the country, Trend reports with reference to the Asian Development Outlook (ADO) 2020 of Asian Development Bank (ADB).

The ADB said that economic growth is forecast to remain positive thanks to government support measures and is expected to rebound in 2021, reflecting stronger oil revenues and an expansionary fiscal policy.

The report projects Kazakhstan’s GDP growth to drop to 1.8 percent in 2020 given the economic implications of COVID-19 and a reduction in oil and gas production due to declining prices.

“Substantial downside risks to the outlook stem from a protracted global economic slowdown and a continued plummeting of global oil prices. In 2021, the growth is expected to rebound to 3.6 percent, supported by rising hydrocarbon and manufacturing output, and higher investments,” the ADO said.

The report also forecasts that industry will expand by 1.2 percent in 2020 with continued government support for manufacturing, and by 4.5 percent in 2021 with the waning impact of external shocks.

“As a state of emergency declared to contain COVID-19 adversely affects transport, trade, and the hospitality industry, services are projected to grow by only 1.5 percent in 2020 then rise to 3.3 percent in 2021,” the ADO said.

The report said that country’s construction sector is forecast to expand by 6.1 percent in 2020 and 4.9 percent in 2021 as a result of support measures included in the government’s stimulus package.

“In the agriculture sector, growth is forecast to accelerate to 2.9 percent in 2020 and 3.2 percent in 2021 with crop production and further livestock expansion. Inflation is projected to accelerate to 6 percent in 2020 and edge down to 5.7 percent in 2021 as a result of administrative and monetary measures. The government’s pledge to utilize regional food stockpiles should help maintain price stability and trim food price inflation,” the report said.

The ADB report notes that the government’s assistance program is helping moderate the impact of shocks on the vulnerable population.

“The country’s welfare system, which recent measures have largely strengthened, plays a unique role as a stabilizer during crises. However, an analysis of the underlying financing model demonstrates the unsustainability of the existing approach in the long run. Improving revenue collection and administration of the social assistance program are basic reforms needed to ensure the sustainability of the welfare system,” the report said.

ADB is committed to achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacific, while sustaining its efforts to eradicate extreme poverty. Established in 1966, it is owned by 68 members—49 from the region.

The latest data said that the overall number of coronavirus cases in Kazakhstan reported since the outbreak began is 448.

First two cases of coronavirus infection were detected in Kazakhstan among those who arrived in Almaty city from Germany on March 13, 2020.

On March 15, 2020, Kazakhstan’s President Kassym Jomart Tokayev signed a decree introducing an emergency state in Kazakhstan due to the coronavirus outbreak, which came in force from 08:00 (GMT +6) on March 16 and will last till 08:00 April 15, 2020.

The outbreak of the coronavirus began in the Chinese city of Wuhan (an international transport hub), at a fish market in late December 2019. The number of people killed by the disease has surpassed 53,000. Over a million people have been confirmed as infected. Meanwhile, over 211,000 people have reportedly recovered.

The World Health Organization (WHO) declared COVID-19 a pandemic on March 11. Some sources claim the coronavirus outbreak started as early as November 2019.

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