Azernews.Az

By Aynur Jafarova

The Asian Development Bank (ADB) forecasts Kazakhstan's economic growth to remain unchanged at 6 percent in 2014 and to accelerate to 6.4 percent in 2015, mainly supported by higher investment and net exports.

"On the supply side, industry is forecast to expand by 2.9 percent in 2014 and a further 4 percent in 2015, as mining revives and the first results of the industrialization program materialize," ADB said in its recently published report.

ADB believes infrastructure development and preparation for the global Expo-2017 will boost construction and related services.

"Agriculture growth is expected at about 4 percent in 2014, accelerating to 4.4 percent in 2015 thanks to ongoing support and huge investments under the state program agribusiness 2020 to modernize and diversify output beyond grain production," the report said. "Services should grow by about 8 percent each year, driven by fast expansion of trade, transport, communications, and business services."

The bank also noted consumption is forecast to grow by 6.2 percent in 2014 and 6.8 percent in 2015.

"The expansion in private consumption is expected to slow to 6.8 percent in 2014 because of new restrictions on consumer credit, higher taxes on property and transport, and the impact of tenge devaluation on prices, recovering to 7.5 percent in 2015. Meanwhile, growth in public consumption is projected to accelerate to 4 percent in 2014 and then subside to 3.8 percent in 2015," ADB said.

The report also noted an anticipated rise in total investment of 6.8 percent in both 2014 and 2015 should boost construction by 3-4 percent.

"Net exports are forecast to rise by 4 percent in 2014 and 4.5 percent in 2015, as devaluation boosts mineral exports and slows import growth," ADB stressed. "Inflation is projected to rise to 11.5 percent in 2014 and then slow to 8.8 percent in 2015 as the effect of the devaluation ebbs over time. Prices are projected to rise in 2014 by 8.1 percent for food and 18.6 percent for other items, which are mainly imported, and by an estimated 6.6 percent for food and 11.8 percent for other items in 2015."

Revenues are projected to reach 15.7 percent of GDP, reflecting mainly higher revenues from corporations, including a 33 percent increase in the crude oil excise from $60 to $80 per ton, the report said.

ADB predicts Kazakhstan's monetary policy over the next 2 years will face the challenge of limiting inflation while supporting growth and maintaining the exchange rate.

"Broad money is projected to rise by about 10 percent in 2014 and 12 percent in 2014, as the resolution of the nonperforming loan (NPL) problem helps expand credit to the private sector," ADB said.

However, given the intention to move to a floating exchange rate, the rate's long-term trend will depend on macroeconomic developments, with the recent tensions in Ukraine introducing downside risk, ADB said.