Baku, Azerbaijan, May 10
By Elena Kosolapova – Trend:
The European Bank for Reconstruction and Development (EBRD) forecasts economy growth rate in Kazakhstan to increase to 2.4 percent in 2017 after 1 percent in 2016, Regional Economic Prospects report of the bank said.
The growth will be supported by stronger exports from the improved oil price outlook, targeted public investments and higher foreign direct investment inflows.
EBRD noted that monetary conditions have been eased in Kazakhstan, the exchange rate has stabilized and inflation is on a downward trend (inflation decreased from 17.7 percent year-on-year in July 2016 to 7.7 per cent in March 2017).
Meanwhile the legacy of high non-performing loans (around $9.6 billion, or 16.4 percent of the loan portfolio as of end-March 2017) continues to weigh on the banking sector, given the presence of off-balance sheet structures that have absorbed the legacy NPLs.
The bank noted that Kazakh government has allocated $6.5 billion to support banks facing insolvency risks, and a possible merger of several banks is being discussed.
“Continued implementation of the government’s reform agenda is likely to lead to further improvements in the country's institutional capacity and its business climate,” the report said.
According to the EBRD, in 2018 growth in Kazakhstan is expected to increase to 3.5 percent, driven by accelerated production at the Kashagan oil field, boosting oil exports, and higher foreign direct investment from China and other countries.
The bank also noted that large state support programs, backed by significant fiscal buffers, will continue to drive growth. Inflation is expected to remain within the 6-8 percent range set by Kazakh National Bank in 2017, and decline further in subsequent years.
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