By Abdul Kerimkhanov
Kazakhstan has a strategic goal to enter the top thirty competitive economies of the world. To do this, the country needs to ensure economic growth at the level of 5-6 percent annually. However, the forecast of the Eurasian Development Bank (EDB) for Kazakhstan's economy is not quite encouraging in this regard.
The EDB expects a slowdown in Kazakhstan's economic growth to 3.3 percent in 2019 amid a decline in oil production due to repair work in oil-producing industries. In 2020 and 2021, GDP growth is estimated at 3.4 percent and 3.5 percent, respectively, Kapital.kz reports.
In 2018, economic growth in Kazakhstan was supported by an increase in oil production and a favorable price situation on the world energy market, said Alexey Kuznetsov, head of the economic analysis department at the EDB.
The expert also noted that the consolidated budget of Kazakhstan in 2018 was executed with a surplus for the first time since 2015. The factors for improving the state of the budget were the increase in state revenues against the background of a relatively favorable external environment and economic growth, as well as a decrease in government spending on improving the banking system compared to 2017.
According to the EDB, the fiscal policy of the authorities during the forecast period will continue to ensure the implementation of development measures in the framework of the main program documents of Kazakhstan.
“The cost of the tenge against the dollar and the euro declined in 2018, which fits into the general trend in emerging currency markets - weakening of the course against the background of the U.S. Federal Reserve interest rate increase and the overall growth of economic and political risks in the world,” Kuznetsov emphasized.
According to the macroeconomic review, inflation in Kazakhstan in 2018 amounted to 5.3 percent in 2018, being within the target interval of the National Bank of Kazakhstan (5–7 percent). Lower prices for automobile fuel after the completion of the modernization program at leading refineries, as well as lower prices for electricity and heat for the population played a significant role in slowing inflation.
The forecast of EDB analysts relative to the dynamics of inflation in 2019 was lowered to 4.3 percent (in December 2018, inflation was projected at 5.4 percent in 2019). The revision of the forecast is primarily due to the effect of lower prices for gasoline and utility services in late 2018 - early 2019.
In the medium term, it is expected that inflation will take shape within the target band of the Kazakh National Bank with a gradual approach to 4 percent by the end of 2021. Reducing inflation will be supported by maintaining the interest rate of the interbank market in tenge near its neutral level, estimated at 7.5–8 percent.
The Eurasian Development Bank is an international financial institution established to promote economic growth in its member states, extend trade and economic ties among them, and support integration in Eurasia through investment.
The Bank was conceived by the presidents of Russia and Kazakhstan and established in 2006, following the signing of an international agreement by the presidents of two countries on 12 January 2006.
The EDB’s greatest achievement of recent years has been its recognition as an international financial development institution specializing in regional integration.
Abdul Kerimkhanov is AzerNews’ staff journalist, follow him on Twitter: @AbdulKerim94
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