Draft Budget Reveals Lower Growth Expectations

ASTANA – The government of Kazakhstan expects gross domestic product growth of 2.1 percent in 2016, 3.6 percent in 2017 and 2.9 percent in 2018, according to a draft state budget for 2016 – 2018 that was sent to the Kazakh Parliament and seen by Reuters, Reuters and AKIPress reported on Sept. 8.

The new budget reflects a slight scaling back of forecasts for next year and for 2018. Previous GDP growth forecasts were for 2.2 in 2016, 3.3 in 2017, 3.6 in 2018 and 4.1 in 2019, according to AKIPress.

Real GDP growth for 2015 is expected to be 1.5 percent. The draft budget predicts no industrial growth in 2016 and growth by 3.4 percent and 1.7 percent in 2017 and 2018. Trade turnover is expected to grow by 2.8 percent this year, by 3.1 percent next year, by 4.8 percent in 2017 and by 4.8 percent in 2018, AKIPress reports.

The Economist Intelligence Unit (EIU), following the switch to a free-floating exchange for the tenge on Aug. 20, predicts growth in Kazakhstan of less than 2 percent for 2015 and 2016, though it said the move would boost the country’s external sector. The European Bank for Reconstruction and Development forecast GDP growth for Kazakhstan at 1.5 percent in February.

Kazakhstan recently announced new subsoil tenders to be auctioned in December, which the EIU says may boost investment. With commodity prices remaining low, the draft budget predicts a decline of 1.3 percent in mining and quarrying from 2015 to 2016, AKIPress reports, with growth resuming at 3.4 percent in 2017.

The draft budget also shows oil production falling to 77 million tonnes next year from 80.5 million tonnes in 2015, Reuters reported.

Deputy Energy Minister Uzakbai Karabalin told reporters on Sept. 9 that Kazakhstan would produce 79 – 80 million tonnes of oil in 2016 if prices remain at $50 per barrel, Reuters reported that day. If the price drops to $40, output will be cut to 77 million tonnes; to $30, 73 million tonnes.

In August, President of Kazakhstan Nursultan Nazarbayev told his government that the country must adapt to oil prices of $30 – 40 per barrel for the coming years.

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