National Bank of Kazakhstan sets inflation target range at 6-8% over 2017, GDP at 1.5-2%

    The National Bank of Kazakhstan set the inflation target range at 6-8% over 2017, said the Bank's chief Daniyar Akishev.
    "The main tasks are to overhaul the monetary policy instruments, as well as to create the pleasant conditions for lending recovery. Key measures will be taken to strengthen the role of the base rate," he said.
    Moreover, the question about the clarification of the target rate in the money market will be considered. In order to adequately reflect the cost of money in the economy, the official refinancing rate will be equalized to the base rate. In addition, reserve requirements mechanism will be improved. NBK plans to continue working on the formation of the risk-free yield curve, which is an indicator of market expectations on interest rates. NBK will continue to issue its own securities-NBK notes with various maturities, said Akishev.
    "If necessary, it will use its own portfolio of government securities for the purchase and sale of government bonds on the secondary market. Along with short-term notes and the auction for the purchase of securities with reverse sale (credit auction), NBK plans to introduce deposit auctions as part of open market operations," said Akishev.
    Forecast for the inflation rate in Kyrgyzstan is 5-7% over the years 2018-2020, Tazabek reported citing the Ministry of Economy.
    Growth in 2017 is projected at 3% (IMF forecast for 2017 is 3.5%, World Bank - 3%, EBRD - 2.6%).
    The global growth over 2017 is projected to be moderate: the global economy will grow 3.4%, Russia - 1.1%, Kazakhstan - 2.5%, and China - 6.5%.
    The National Bank of Kazakhstan estimates growth of the Kazakhstani economy in 2017 to be 1.5-2%, with oil prices set at USD40 per barrel, Akishev said.
    The positive - but still quite weak - trend in 2017-2018 reveals the slow adaptation of the economy to the new economic reality. The economy will operate below its potential level until 1Q2018, reflecting deflationary pressures from domestic demand side. External demand is expected to be in the positive zone with respect to its potential by mid-2018, primarily due to the acceleration of economic activity in Europe and Russia, which will have a positive impact on the exports of Kazakhstan, said Akishev.
    In addition to the oil sector, there are industries whose contribution to GDP dynamics remained stable over the past few years. Among sectors with significant potential are agriculture and agro-industrial complex, in particular the development of animal husbandry, food production, and light and textile industries.
    "In addition, our geographic location creates opportunities to improve transport and logistics infrastructure and develop our transit potential. Projects in these areas will attract foreign investments, particularly those of strategic partners such as China, Russia, India, Iran, and others. Currently, the government is actively involved in the development of potential sectors of the economy through financing the enterprises of the real sector at the expense of budgetary funds, supporting small and medium-sized businesses," said Akishev.
    Reported by AKIpress.