BAKU, Azerbaijan, May 10. Kazakhstan has been negatively affected by the situation in Ukraine, ‘Regional Economic Prospects’ report of European Bank for Reconstruction and Development (EBRD) said, Trend reports citing the EBRD.
The report said that in 2021, Kazakhstan remained reasonably resilient to external shocks, owing to significant fiscal buffers and National Fund reserves.
“Real GDP grew by 4 percent amid the easing of Covid19 restrictions, a recovery of domestic demand, and strong export performance. The January 2022 events, while shaking the country’s political foundations, did not have a major impact on the economy. In January-February 2022, the economy was helped by strong external demand, with exports rising by 71.4 percent year-on-year, supported by higher oil prices,” the report said.
However, the EBRD noted, Kazakhstan has been negatively affected by the situation in Ukraine.
“Like other regional currencies, the Tenge (Kazakh national currency) suffered a speculative attack in late February but almost fully recovered in the second half of March, helped by the Rouble’s (Russian national currency) comeback and an adequate reaction by the Kazakh regulator. That said, the general mood among investors and financiers is one of severe uncertainty. Inflation soared to 12 percent year-on-year in March 2022 owing to rising food and commodity prices,” the report said.
Facing higher costs of funding (the central bank hiked its policy rate from 10.25 percent in January to 13.5 percent in February and to 14 percent in late-April 2022), commercial banks raised interest rates and cut back on long-term lending, negatively affecting consumer spending and investment, the report added.
ЭAnother major concern is the possibility of secondary sanctions being imposed on Kazakh banks for dealings with Russian entities. Transportation and logistics have also become a major worry. The Caspian Pipeline Consortium (CPC) pipeline – accounting for two-thirds of Kazakhstani oil exports – is partially blocked since March 23 due to technical issues at the Novorossiysk port. Another wave of Covid-19 in China led to additional border crossing and trade restrictions,” the report said.
Most importantly, the report emphasized, as Western companies pull out of Russia, Kazakhstan has to seek replacement suppliers and alternative supply routes.
“The extra costs of more complicated trade logistics (over the Caspian Sea and Georgia) will likely be passed onto Kazakh consumers and producers, adding to inflationary pressures and detracting from the country’s international competitiveness. Overall, the economy is expected to grow at a slower pace of 2 percent in 2022, and 2.5 percent in 2023, assuming commodity prices remain elevated and Kazakhstan maintains its access to export markets,” the report added.
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