National Bank updates economic forecast for Kazakhstan

NUR-SULTAN – The National Bank of Kazakhstan has updated its forecast for the country’s economic growth to 3.6-3.9% in 2021 and 4.0-4.3% for 2022, reports the press service of the National Bank.

“The main factors behind the revised forecasts were the rise in the price of oil and the expansion of the positive fiscal stimulus against the backdrop of an upward revision of fiscal spending for the current year. A faster recovery of business activity in the economy, as well as the growth of the real incomes of the population, will contribute to the expansion of aggregate demand, which will be the engine of economic growth, ”the bank said. in a press release.

A recovery in exports is also expected in the second half of this year due to the increase in oil production, as the OPEC + agreement eases its requirements.

Economic growth in 2022 will be driven by the continued increase in domestic demand amid an improving epidemiological situation and increasing exports while restrictions under the OPEC + agreement are further relaxed.

The National Bank’s Monetary Policy Committee also decided to set the base rate at nine percent per annum with a corridor of +/- 1.0 percentage point.

“The decision was made taking into account the balance of short and medium term inflation risks. External inflationary pressure remains caused by rising world food prices and inflation in countries that are Kazakhstan’s main trading partners, ”the bank said.

In May, annual inflation stood at 7.2%.

Strong fiscal stimulus, rising domestic fuel prices, higher food inflation due to rising prices in world markets, and the emergence of imbalances in the domestic food market, as well as the end of bank incentives central to developed economies, are among the inflation risks in Kazakhstan.

In 2022, the National Bank expects inflation in Kazakhstan to be between four and six percent due to several factors – inflation in China and the European Union will not reach their target levels and inflation in Russia will stabilize at four percent, taking into account a gradual decline in global food consumption. prices.

At the same time, business activity and consumer demand continue to recover.

In January-April 2021, GDP growth was 0.7% in annual terms, and a recovery is observed in trade (5.7% growth), transport (slowdown to -9%), industry (7.7%), construction (12.5%) and information. and communication (11.1%).

Kazakhstan is also affected by the positive development of the world economy due to the improving epidemiological situation and the ongoing deployment of vaccines.

“This factor, together with the current rapid economic growth in several major economies, has led to revised forecasts by international organizations regarding the development of the world economy. The IMF has raised its forecast for global economic growth for 2021 from 5.5% to 6%, ”the bank said.

According to IMF forecasts, economic growth in the EU will be 4.4% in 2021, 8.4% in China and 3.8% in Russia.

Last week, National Bank President Yerbolat Dossayev met with Kazakh President Kassym-Jomart Tokayev. Dossayev briefed the President on the preliminary results of monetary policy between January and May, the resumption of trade activity around the world and the transition of central banks to neutral monetary policy amid rising inflation and inflation expectations.

Dossayev also spoke about the positive growth trajectory of the Kazakh economy and the prospects for its development in 2021.

He said that for the first time since September 2016, Kazakhstan’s gross international reserves reached $ 95 billion due to rising gold prices, investment income resulting from favorable conditions in foreign markets and increase in the income of the National Fund.

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