NUR-SULTAN – The Asian Development Bank raised its economic growth outlook for Central Asian economies this year to 4.1 percent from the previous 3.4 percent projected in April in its latest Asian Development Outlook 2021.
The outlook was improved for Armenia, Azerbaijan, Georgia, Kazakhstan, and Uzbekistan with the subregion’s 2022 outlook rising to 4.2 percent from 4 percent.
“Most economies in Central Asia are recovering more swiftly than expected from downturns in 2020 caused by the COVID-19 pandemic. Accordingly, combined subregional growth projections for 2020 and 2021 are raised from forecasts published in April in the Asian Development Outlook 2021 paper. With a strong recovery in domestic demand, subregional inflation projections are also being raised for both years, and the current account deficit for 2022 is now projected to be wider than forecast in April,” said the report.
In Kazakhstan, the economy expanded by 2.3 percent in the first half of 2021. Underpinned by a stronger fiscal policy and rising commodity prices, the economy is projected to grow from 3.2 percent to 3.4 percent for 2021 and from 3.5 percent to 3.7 percent for 2022.
These projections are underpinned by higher vaccination rates.
Kazakhstan’s GDP benefitted from the growing services and industry sector in the first six months of 2021, but a slow easing of coronavirus restrictions hindered that growth.
The industry grew by 1.3 percent driven by a 5.6 percent growth in manufacturing. Mining contracted by 3 percent, the result of the oil production cuts to which Kazakhstan committed under the OPEC+ deal.
Construction is booming in Kazakhstan, with a staggering 11.9 percent growth supported by state housing and infrastructure programs as well as the recent change that allowed citizens to withdraw part of their pension savings to purchase housing.
“Higher inflation projections for both years reflect higher commodity prices and rising real incomes resulting from expansionary fiscal policy. The forecast for the current account deficit is unchanged for 2021 but marginally widened for 2022 as faster growth boosts imports,” said the report.
Government spending on education, healthcare, and social support also increased by 18.1 percent, 11.9 percent, and 8.6 percent, respectively.
“In the first six months of 2021, tax revenue increased by 29.2 percent, with receipts of corporate income tax rising by 32.6 percent, value-added tax by 24.4 percent, and personal income tax by 14.1 percent. Higher receipts reflected a doubling of oil export duty collection, expanding economic activity, and a phasing out of tax holidays and waivers,” said experts.
As Kazakhstan is slowly easing its coronavirus restriction, prospects have begun to improve and now look far better.
The ADB noted the improved growth prospects for mining, and the positive impact of government infrastructure, and manufacturing-support programs.
Consumption is expected to increase to 2.9 percent this year and to 3.2 percent next year.
“Total investment will rebound, reflecting substantial government support for housing and infrastructure. Recovering exports are projected to turn net exports of goods and services positive. With the growth in consumption accelerating, this update marginally raises projections for growth in both 2021 and 2022,” said the ADB in the report.