BAKU, Azerbaijan, April 11. Kazakhstan’s economy has recovered from the initial effects of the COVID pandemic, Trend reports citing the International Monetary Fund (IMF).
The IMF noted, real GDP grew by 4 percent in 2021, following a 2.5 decline in 2020.
“Substantial buffers and policy space enabled the authorities to mitigate the impact of the shock on livelihoods and economic activity. Progress in vaccinations also contributed to the recovery, and activity returned to its pre-COVID level in 2021. However, spillovers from the war in Ukraine will affect growth and fuel inflationary pressures in 2022. Together with the ongoing pandemic and heightened social tensions, they raise substantial uncertainty about economic prospects. In the long term, sustainable growth will require greater economic diversification and decisive actions to tackle climate-related challenges,” the IMF said.
The IMF noted Kazakh authorities plan to return to fiscal consolidation to preserve buffers once the recovery is entrenched.
“The set of fiscal rules has been expanded aiming to safeguard sustainability and intergenerational equity and promote a countercyclical policy framework. Facing elevated external spillovers and inflation pressures, the National Bank of Kazakhstan (NBK) raised its policy rate and signaled possible further tightening if needed in 2022. Banks weathered the COVID crisis well, but the withdrawal of support measures and a rapid pickup in consumer lending have led to intensified financial supervision. The government, NBK, and financial regulatory agency are strengthening their cooperation and policy coordination,” the IMF said.
In INF’s words, the social unrest in early 2022 has provided new impetus for structural reforms.
“Key priorities announced by the authorities are to raise economic growth and inclusion by promoting economic diversification, private sector development, and improved governance. The authorities are also committed to reduce greenhouse gas emissions by 15 percent in 2030 (relative to the 1990 level) and achieve carbon neutrality by 2060. Given the multiplicity of reform needs, a Supreme Council for Reforms, chaired by the President, was created to strengthen reform prioritization and implementation,” the report said.
---
Follow the author on Twitter: @nargiz_sadikh