BAKU, Azerbaijan, Dec. 10
By Nargiz Sadikhova - Trend:
Kazakhstan will face moderate GDP contractions of 2.2 percent year-on-year in 2020 – smaller declines than most oil-exporter peers and the regional median, the forecast of Renaissance Capital said, Trend reports citing the report.
The agency also said that in its base case of oil prices at $50/barrel in 2021 and a smooth increase in oil production, it forecasts GDP growth rebound next year of 5.1 percent year-on-year in Kazakhstan.
The report said the agency revisited its oil scenarios and estimates the sensitivity of Kazakhstan’s economies to a 10 percent oil price change at 0.4-0.5 percent points of GDP growth, with 2-3 percent currency additional appreciation/depreciation.
As well as seeing only a moderate contraction in 2020, Kazakhstan also managed to preserve solid fiscal positions, maintain their sovereign ratings, and avoid spikes in inflation and dollarisation.
This left room for the implementation of anti-crisis stimulus this year, while keeping fiscal deficits below those of most commodity-exporting peers – slightly above 4 percent of GDP in Kazakhstan.
The agency forecasts fiscal deficits in 2022 at close to 2.4 percent of GDP in Kazakhstan in the base case. In line with its current fiscal strategy, Kazakhstan should also prioritize domestic borrowings to finance a fiscal gap in 2021-2022 (75 percent of borrowings in 2020 were local).
National currency-denominated government bonds offer a yield of c. 10 percent currently (an almost flat curve), which the agency views as attractive given the increasing depth and liquidity of the segment, a stable currency outlook, and a targeted medium-term inflation decrease. The agency believes this segment could be worth looking at for fixed income investors with a local currency mandate.
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