President Kassym-Jomart Tokayev received the National Bank governor, Yerbolat Dossayev. The NBK governor reported on preliminary outcome of the monetary policy implementation for 7 months of this year.
Dossayev informed the President about the revision by the International Monetary Fund of the forecasts for the global economic recovery pace and correction of financial markets against the backdrop of the new coronavirus wave.
It was noted that inflation and inflationary expectations remain the main challenge for the global economy recovery. The President was informed about the main reasons for the acceleration of inflation in Kazakhstan (8.4% - at the end of July 2021) and the decision of the National Bank to raise the base rate (to 9.25%) in order to stabilize inflation.
Yerbolat Dossayev also briefed on moderate recovery in business activity against the background of quarantine restrictions, on the state of the National Bank's gold and foreign exchange reserves, the National Fund's assets and on the positive growth dynamics of pension assets. Preliminary data on the current account of the balance of payments was presented, which in the first half of the year developed with a deficit of $ 1.7 billion due to the grown economic activity and consumer imports.
Ending the meeting, Tokayev instructed to pay special attention to preserving and increasing the National Fund assets and, together with the Government, to take efficient measures to stabilize inflation.
In Kazakhstan, inflation is record high since 2017, Dossayev noted at a government meeting, while addressing the cabinet."According to forecasts, in developed countries inflation will stabilize by the end of 2021, in developing countries it will remain above the target level until the end of 2022, facilitated by pro-inflation pressure of food, raw materials and the weakening of exchange rates, "- said the speaker.
According to him, inflation in Kazakhstan, after a sharp growth in June to 7.9%, continued to grow and reached 8.4 percent in July - highest since 2017.
“Acceleration of inflation is taking on a sustained character against the backdrop of increasing imbalances in food markets, continued growth in world prices for raw materials and a high inflationary background in the countries - the main trading partners, especially in Russia. More than half of the contribution to the annual rise in prices continues to come from food inflation, which increased from 10.6 to 11.0 percent in July of this year as a result of an increase in prices for certain vegetables, uncharacteristic for the summer months," Dossayev said.
Additional pressure continues to be exerted by the rise in prices for meat and vegetable oil, he added.
Non-food inflation rose from 6.9% to 7.2% due to the accelerated growth in prices for durable goods and fuels and lubricants."Inflation of paid services accelerated from 5.6 to 6.1 percent amid higher utility tariffs and higher prices for certain market services.Giventhe significant spike in food prices, fuels and lubricants, rising electricity prices, stronger fiscal stimulus and heightened inflationary expectations, according to preliminary estimates of the National Bank, inflation by the end of 2021 is expected to be in the range of 6-7 percent, "Dossayev continued.
The updated forecasts will be presented in the framework of the upcoming forecast round in August-September of this year. Amid a significant acceleration of inflationary processes, in order to ensure price stability within the framework of the pursued monetary policy, on July 26 the National Bank resolved to raise the base rate by 25 b.p. to 9.25%, Dossayev announced.
The PM noted that for the fourth month in a row the economy of Kazakhstan continues to demonstrate a confident recovery dynamics of growth. GDP growth in the seven months made 2.7%.
The real economy sectors remain the main growth driver. The dynamics was provided by the growth of production in industry (+ 2.5%), construction (+ 11.1%), as well as stable growth rates in agriculture (+ 2.4%).
The 2.5% growth in industry was provided by an increase in production in the manufacturing sector by 5.9%. The increase in production rates was influenced by the growth in pharmaceutical production (+ 38.9%), mechanical engineering (+ 22.7%), incl. in the automotive industry (+ 34.7%) and the production of locomotives and wagons (+ 37.7%), oil refining (+ 8%), light industry (+ 5.4%), food production (+ 3.9%) and chemical industry (+ 1.9%).
High growth rates are observed in the construction sector - by 11.1% and commissioning of housing by 10.3% or 7.7 million square meters.Despite the continuing restrictive measures, growth rates in the services sector (+ 2%) continue to accelerate due to strong dynamics in trade (+ 9.1%) and communications (+ 12.5%).
In agriculture, there is a stable growth rate of 2.4% due to a steady growth in livestock breeding (+ 3.4%).
The growth of investments in fixed assets (IFA) stands at 18.3% excluding mining. High IFA indicators were noted in construction (+ 129.6%), manufacturing (+ 82.9%), information and communications (+ 48%), agriculture (+ 45.5%), trade (+ 40%).
The PM instructed the governors to take measures to curb prices for socially significant foods, the Ministry of National Economy and concerned state bodies were requested to adopt by the end of August and start implementing a set of anti-inflationary response measures, as well as a new package of measures to curb prices for socially significant goods.
By Ekaterina Eliseeva for the Kazakhstankaya Pravda.
