The Kazakh National Bank forecasts inflation rate in the country to decrease to 6.5-7 percent in 2017, and to begin to smoothly enter the target range of 5-7 percent in 2018.
“Slowdown of inflation will occur on account of a decrease in inflation expectations, an enhancement of stability and predictability of the situation on domestic money market, as well as an adoption of moderately restrictive monetary policy in 2017,” the bank reported.
In 2016 inflation rate hit 8.5 percent in Kazakhstan.
This base scenario assumes the price of oil at $50 per barrel over the forecast period in view of stabilization of the situation in the oil market, as well as more optimistic consensus forecasts of international institutions on the price of oil.
The National Bank forecasts that economic growth in Kazakhstan to accelerate to 2.2 percent in 2017 and to 4.7 percent for the nine months of 2018.
“Economic growth in this period will be provided due to the growth in domestic consumption amid rising real wages, the growth of investment in fixed assets in the framework of the implementation of government programs to support and diversify the economy, the growth of production of mineral resources (the Kashagan effect),” the bank said.
Growth in imports of consumer and investment goods as a result of the expansion of domestic demand will be the limiting factor in GDP growth.
According to Kazakh National Bank, external inflationary environment is characterized as moderately favorable. This is, primarily, due to the slowdown of inflationary processes in the Russia. The bank went on to add that the external demand will recover due to the weak growth of the EU economy, low positive rates of GDP growth in Russia and decelerating, but still high rates of economic growth in China.
The main inflation risks are high producers’ price inflation and a significant increase in real wages in key sectors of the economy in 4Q2016.
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