Photo: ekonomist.kz
Kazakhstan's economic outlook for the next two years suggests a stable growth trajectory, driven primarily by continued carbon use and increased consumer spending. Although the economy has begun to recover from the negative effects of the Russian invasion of Ukraine in 2023, growth is expected to slow to 3.4 % in 2024 due to lower-than-expected oil production. In 2025, real GDP is projected to grow by 4.5-5 % as capacity expansions at existing fields boost exports and support growth in the petrochemical sector in 2025 and beyond. Investment in the mining sector and industrial production is expected to remain stable. Lower inflation and easing financial conditions will support household spending growth in 2024.
The elevated inflation rate is expected to decline but remain above the central bank's target in 2024 and 2025. Inflationary pressures began to ease in 2023, reaching 9.8 % in December 2023 as a result of tighter monetary policy. Reaching the 5% inflation target of the National Bank of Kazakhstan (NBK) may be realistic if monetary policy is not eased prematurely and if fiscal consolidation plans are implemented. Continued measures to phase out market-distorting interest rate subsidies will enhance the effectiveness of monetary policy transmission.
The banking system remains resilient to external shocks, including the impact of the Russian invasion of Ukraine. The NPL ratio stood at 3.2 % in November 2023. Banks have maintained continuous funding and high levels of liquid assets above regulatory requirements, although signs of rising credit risks require ongoing monitoring and risk mitigation.
The current account deficit is projected to remain at 3.0 % of GDP in 2024 and at 2.3 % of GDP in 2025. Increased import demand and lower export earnings due to falling oil prices lead to a current account deficit of around 3.3 % of GDP in 2023. The gross foreign exchange reserves of the NBK are equivalent to seven months of import cover. The deficit is expected to persist in 2024, but will gradually decline with continued FDI inflows, which will mainly benefit the mining sector.
The fiscal plan for the period 2024-2026 aims at fiscal consolidation. Fiscal stimulus measures, mainly focused on social security programmes, led to a consolidated budget deficit of 1.8 % of GDP in 2023. The government plans to gradually reduce the deficit over the medium term in line with the fiscal buffer rule. Government debt remains sustainable, but debt service costs are rising, reflecting the reliance on domestic debt in a context of high domestic interest rates.
Kazakhstan's economic growth prospects face a number of downside risks stemming from both internal and external factors. Russia's invasion of Ukraine and the resulting tensions in and around the Black Sea region could further threaten Kazakhstan's oil exports through the Caspian pipeline, with significant economic and fiscal implications given the importance of the hydrocarbon sector. Any large-scale unplanned maintenance of oil fields and unexpected delays in the development of the Tengiz field could result in lower production and slower economic growth. Unforeseen external pressures and fluctuations in the tenge exchange rate could lead to higher inflation. In addition, given Kazakhstan's economic ties to Russia, the risk of secondary sanctions remains a concern, which could undermine market confidence, discourage foreign direct investment and limit economic growth.
ekonomist.kz/gnews.cz
https://ekonomist.kz/ekonomist-kz/formirovanie-zavtrashnego-dnya-reform
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