ADB says Kazakhstan’s economic growth to slow down
By Sara Rajabova
The Asian Development Bank forecasted a drop in economic growth in Kazakhstan, as it grapples with economic difficulties caused by recent global developments.
Economic growth in Kazakhstan is projected to slow further to 1.9 percent in 2015 before recovering to 3.8 percent in 2016, according to a new ADB report.
It said inflation should ease, but weak oil prices will turn the current account into small deficits in both years.
ADB’s flagship annual economic publication, Asian Development Outlook 2015, said adverse external factors caused growth in Kazakhstan to slow down to 4.3 percent in 2014 from 6.0 percent a year earlier. However currency devaluation in February 2014 strengthened budget revenues and the current account balance while adding to inflation.
Despite the launch of the Eurasian Economic Union with Armenia, Belarus, and the Russian Federation, growth in Kazakhstan is forecasted to slow down to 1.9 percent in 2015 - a reflection of the oil prices slump, Russia's economic weakness and the tenge appreciation against the ruble, which has hurt the competitiveness of Kazakh exports and boosted imports from Russia, according to report.
The Eurasian Customs Union has been formed by Russia, Belarus and Kazakhstan in 2010. The transition of the ECU into an EEU began in January 2015. On January 1, the treaty between the presidents of Russia, Kazakhstan and Belarus authorizing the EEU went into effect. The EEU aims at promoting free movement of goods, capital, and people between all member states.
Growth is projected to recover to 3.8 percent in 2016 as the economy adjusts to low oil prices and as stimulus measures take hold, the report said.
On the supply side, mining is forecasted to contract by 10.0 percent in 2015, to remain unchanged in 2016, dragging down the industry by 5.3 percent in the first year and allowing marginal growth of 0.4 percent in the second.
The slowdown will limit growth in services to 5.0 percent in both years. Investments in housing and infrastructure under a state program for regional development are projected to boost construction by 4.0 percent annually and past investment under the Agriculture 2020 development program is projected to expand agriculture by 2.7 percent in 2015 and 4.0 percent in 2016, according to the report.
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Sara Rajabova is AzerNews’ staff journalist, follow her on
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