BAKU, Azerbaijan, March 9
Trend:
Kazakhstan's economy is expected lower growth trajectory than previously thought due to the geopolitical crisis, Trend reports citing Kazakhstan’s National Bank.
World prices for Brent oil exceeded $100 per barrel for the first time since 2014. High prices are supported by the risk of interruptions in oil supplies from Russia due to increased geopolitical tensions. There is a decrease in global oil reserves against the high demand and weaker oil production by OPEC + countries, where the actual production was again below the allowed quotas in January 2022. Further prospects for the development of the global oil market, despite the current heightened uncertainty in the world, remain generally positive.
Food and Agriculture Organization (FAO) food price index reached a historical record level on the back of a significant increase in prices for vegetable oils, dairy products, cereals products and meat in February of this year. The price of wheat renews a 14-year high due to fears that the Russian-Ukrainian conflict will lead to a shortage of wheat on the world market.
Dramatically changing geopolitical and external economic environments in trading partner countries and an unparalleled level of uncertainty greatly complicate the ability to fully prepare forecasts.
Forecasts of the National Bank were supplemented by expert assessments and were formed for a qualitative assessment of the probable direction of the main macroeconomic indicators.
According to the National Bank inflation will be higher than previous forecasts. The main reason for the higher dynamics of inflation is the pass-through of the decreasing of the exchange rate of the Kazakhstani tenge (KZT) to domestic prices due to the high share of imports in the consumption of non-food products.
Strengthening of external inflationary background is also predicted, primarily against the background of the expected acceleration of inflation in Russia and increased inflationary pressure in the world due to rising food and energy prices. The risk of exceeding the target by the end of 2022 has significantly increased.
Kazakhstan's economy is expected to have a lower growth trajectory than previously thought due to the geopolitical crisis. The pace of economic growth will be supported by high primary goods prices, a potential increase in budget spending, also an improvement in the epidemiological situation.