BAKU, Azerbaijan, Nov. 18
By Maryana Akhmedova – Trend:
The economy of Kazakhstan has suffered a cumulative shock from the COVID-19 pandemic and the oil market, but is now recovering, Trend reports via economic outlook of International Monetary Fund (IMF).
Kazakhstan’s economic output in 2020 decreased for the first time in over 20 years – by 2.5 percent, due to the decline in oil production and domestic economic activity, the report said.
The recovery, which began in late 2020, contributed to a real GDP growth rate of 3.5 percent from January through October, bringing the output back to the pre COVID-19 rates, the IMF said.
According to the report, since the beginning of the global pandemic, inflation has exceeded the target corridor set by the National Bank of Kazakhstan (NBRC) of 4-6 percent and reached 8.9 percent in October, mainly as a result of higher food prices.
Credit growth in Kazakhstan increased to 16 percent in September 2021, reflecting the rapid growth of consumer credit and extensive public support programs, the IMF said.
As of labor market and poverty indicators, those remained stable throughout the COVID-19 pandemic, with unemployment stable at around 5 percent, the report said.
According to the IMF, the recovery of Kazakhstan’s economy will continue, with risks generally balanced.
The growth rate in Kazakhstan is likely to reach 3.7 percent in 2021 and converge to its potential (4 percent for the non-oil sector) in the medium term, the report said.
Inflation may remain high in the short term because of strong domestic demand and supply disruptions in world markets, but should fall to the NBRC target corridor by the end of 2022, the IMF noted.
After a significant improvement in 2021 due to favorable commodity prices, the current account should gradually revert to a deficit of about 3 percent of the GDP in the medium term, the report said.
“The main risks to this outlook are lower-than-expected vaccination rates, slower growth of trading partners, lower oil prices, and persistent inflationary pressure, which could require further monetary policy tightening. By contrast, higher-than-expected oil prices would be an upside and strengthen buffers against shocks,” the IMF concluded.
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