National Bank of Kazakhstan shares inflation forecasts for 2021

Oil&Gas Materials 20 September 2021 17:22 (UTC +04:00)
National Bank of Kazakhstan shares inflation forecasts for 2021

BAKU, Azerbaijan, Sept. 20


The expectations of the National Bank of Kazakhstan on the dynamics of short-term GDP growth until the end of 2021 have been slightly revised downwards, Trend reports, referring to the National Bank of Kazakhstan.

The forecast has not undergone significant changes, and the revision is due to slower current economic growth rates compared to the expected ones.

The growth of economic activity in Kazakhstan in 2021 according to the baseline scenario will be 3.5 - 3.8 percent, with the price of Brent crude oil at $60 per barrel by the end of 2021.

The post-pandemic demand of households is expected to continue to be implemented, which will become one of the main drivers of GDP growth this year.

The increase in household consumption will be supported by a moderate increase in the real income of the population. The increase in income is a consequence of the high growth of real wages in the economy due to the growth of budget expenditures on labor remuneration in the public sector, as well as the recovery of wage growth in the real sector against the background of a revival of business activity and enterprise income. An additional contribution to the growth of household consumption will be made by consumer lending.

Short-term inflation forecasts were revised upwards. At the same time, when updating the inflation forecast, a set of anti-inflationary response measures was taken into account, approved by the Government on behalf of the President of the Republic of Kazakhstan to stabilize non-monetary factors of inflation.

The adoption of operational measures will allow reducing food inflation to 8 percent by the end of 2021. Taking into account the historical dynamics of inflation in the last months of 2021, as well as the degree of effectiveness of the implementation of a Set of Measures, the annual inflation will be in the range of 7.5 - 8.5 percent.

The annual inflation forecasts in 2022 were also revised upwards compared to previous estimates due to an increased short-term forecast, stronger fiscal stimulus, strengthening of the external inflationary background, and higher dynamics of world food prices.

Despite this, against the background of the release of the high base of 2021, inflation will slow down to the upper limit of the target corridor of 4-6 percent in 2022.