AERC Expects Kazakhstan’s Real GDP to Continue Its Recovery, Warns About Consequences of New Coronavirus Wave

NUR-SULTAN – The Applied Economics Research Centre (AERC) shared its macroeconomic report on Kazakhstan on July 26, projecting the country’s 2021 real GDP growth to reach about 3.9 percent and expressing concern that the economic recovery could be affected by a new coronavirus lockdown.

Photo credit: Kapital.kz.

The experts at the AERC rely on three main factors for their prognosis. The first is the fact that the price of Brent crude oil is expected to be $65 per barrel in 2021. The second is that the economies of Kazakhstan’s trading partner countries will grow by 4.9 percent this year. The third is that the volume of oil and gas condensate production in Kazakhstan is expected to reach 86 million tons in 2021.

The AERC also improved its forecast of nominal cash income in the country from its initial April forecast due to higher growth in nominal wages. The current projected nominal cash income growth rate for 2021 is 10.5 percent.

The prognosis of the average annual consumer inflation in comparison to 2020 was also adjusted by the AERC from an initial 7.4 percent to 7 percent. The inflation rate is negotiated by a gradual slowdown in the growth rate of food prices against the background of a number of measures by the government aimed at curbing food inflation.

According to the AERC estimates for 2021, the excess of exports of goods over imports in Kazakhstan’s foreign trade will amount to $10.9 billion.

Mass vaccination has allowed for significant improvement of the Kazakh economy so far this year. Despite the fact that the current epidemiological situation in the country still requires maintaining a stimulating fiscal policy, the AERC predicts lower state budget expenditures of $36.5 billion due to a gradual recovery of business activity in the country since May. 

However, the mutation of the virus and the expansion of the delta variant have the capacity to negate the economic achievements due to the introduction of new lockdown measures. The AERC experts stress the importance of further vaccination for preserving the positive dynamic of Kazakhstan’s economy.

The AERC is Nur-Sultan-based institution established in 2010 and specializing in legal, analytical, and consulting services.

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