ASTANA – A recently released European Bank for Reconstruction and Development (EBRD) report forecasts Kazakhstan’s economy will grow 3.8 percent this year and 3.5 percent in 2018.
In a Nov. 7 report, the bank attributes the growth to increased oil production at the Kashagan field, current oil prices and a recovery in real incomes growth.
“The broad-based recovery is a very welcome development. It also creates a window of opportunity to carry out reforms that will ensure the sustainability of the stronger growth rates over the longer term,” said EBRD’s Chief Economist Sergei Guriev.
In 2016, growth was 1.1 percent, according to the multi-nation lender. The EBRD report notes that 2017 growth was also supported by stronger activity in construction, agriculture and transportation and says the country’s banking sector problems are manageable. The report predicts inflation at 6-8 percent in 2017-2018. Kazakhstan’s banking sector consolidation will also help clean up balance sheets of banks with the largest non-performing loans, it notes.
The EBRD tracks the economies of 37 emerging countries, financing their projects and supporting reforms aimed at sustainable and environmentally-friendly market economies. The recent report shows that economic growth is observed in 27 emerging countries this year. Growth in the region is expected to continue in 2018 but at a more moderate pace, according to EBRD.
The report also says that the current outlook is subject to risks, including geopolitical tensions, persistent security threats, the growing appeal of populist anti-globalisation policies in advanced economies and a high degree of concentration in the sources of global growth.
The Russian economy, being the largest in the EBRD region and having a large influence on Kazakhstan’s economy, has now pulled out of recession after a cumulative contraction of 3 percent over the last two years. Russia is expected to see GDP growth of 1.8 percent this year and 1.7 percent next year. However, the report says that investment activity in Russia is constrained by economic uncertainty, and signs of stress have appeared in the financial sector.
The bank believes the increase in the oil price – compared with 2016 – has been a positive factor for Russia, and also for other commodity exporters and countries in Central Asia and eastern Europe and the Caucasus that rely on Russia for remittance flows or as a destination for their exports.
The gap in growth rates between the east and west of the EBRD region is also expected to narrow, according to the report.