BAKU, Azerbaijan, September 28. Despite a very significant exposure to Russia and the challenges associated with a complicated political transition, the Kazakh economy achieved broad-based growth of 3.4 percent year-on-year in the first half of 2022, the Regional Economic Prospects (REP) report of the European Bank for Reconstruction and Development (EBRD) said, Trend reports.
Repeated disruptions at CPC’s Novorossiysk terminal notwithstanding, the country’s oil exports in the first half of 2022 reached $24.8 billion (up 85 percent year-on-year). Total exports in the first half of the year stood at $42.2 billion, a level not seen since 2014. Elevated prices of oil were the main contributor to oil export growth, but volumes increased as well by almost 10 percent.
While the EU (the Netherlands and Italy) remains the main market for Kazakh oil exports, China, South Korea and Singapore are more than doubling their purchases in physical volumes. Banks in Kazakhstan are enjoying a steady flow of new clients from sanctioned countries.
Kazakh subsidiaries of the Russian banks (Sberbank and Alfa bank) have been wound down and sold to Kazakh banks. Payments bottlenecks between Kazakh and Russian companies have been by and large resolved, with businesses shifting to payments in national currencies. As the economy shows clear signs of overheating, the main challenge for Kazakh policymakers is to implement fiscal consolidation measures over the medium term.
The central bank continued ratcheting up its policy rate throughout 2022, bringing it to 14.5 per cent in July. However, the pass-through from the policy rate to inflation (16.1 per cent in August) remains limited due to the prevalence of government-subsidised credit programmes and procyclical fiscal policies.
Overall, the economy is expected to post 3 percent growth in 2022, and 3.5 percent in 2023. Significant downside risks relate to possible continued interruptions of oil transit through Novorossiysk.