The rate of economic growth in 2018-2019, according to the National Bank of Kazakhstan, will be 3.5% and 2.6%, respectively, against 3.5% and 2.7% in the previous forecast round, the Interfax reports with reference to the press-service of the regulator. "The prerequisites for GDP growth in 2018 did not undergo significant changes. Positive dynamics of economic activity in 2018 will be observed against the background of growth in domestic consumer demand, accompanied by an increase in consumer lending," the report said.
According to the National Bank, it is expected that the positive real incomes of the population will continue to grow. There will be a positive dynamics of investment activity as a result of projects in the mining sector and positive dynamics of investments in housing construction.
"Increasing the volume of oil production and export at the Kashagan field will contribute to the overall growth of exports of goods and services. In 2019, economic growth will slow down, which will be associated with a weak dynamics of domestic demand amid weakening of the exchange rate, as well as limited potential for consumer lending," the information says.
According to the updated estimates of the National Bank, the gap in output in Kazakhstan in the short term will be positive, having a weak pro-inflationary influence. In the medium term, it is assumed that the output gap will shift to a slightly negative area. In the information it is noted that the economy of Kazakhstan remains exposed to external shocks, oil prices are still an important factor determining the dynamics of economic activity.
When the $40 per barrel scenario is implemented, there is a high risk of annual inflation outperforming the upper boundary of the target corridor in 2018-2019, which will require the application of appropriate measures by the monetary policy. "The risk profile deteriorated against the backdrop of increased investment risks associated with geopolitical tensions, capital outflows from developing countries and accelerating external inflation. In addition, supply shocks and non-compliance with inflation expectations continue to be important risks for the inflation forecast," the press release notes.
According to forecasts, annual inflation in Kazakhstan in 2018 will be within the target corridor of 5-7%. In 2019, annual inflation will begin to smoothly enter the new target corridor of 4-6%, being near its upper boundary.
"Compared to the previous forecast round on May-June 2018, the inflation trajectory was adjusted towards a slight increase, which increases the risks of exceeding the target of 2020 below 4%. This was due to the observed weakening of the national currency against the background of depreciation of the Russian rouble and other currencies of developing countries; the worsening of the external inflation background associated with the possible excess of inflation in Russia of its target level; toughening of external monetary conditions; the expected increase in quotations for cereals due to lower inventories and increased global consumption," the report said.
Inflation trends will determine the positive dynamics of domestic consumer demand on the background of the growth of real money incomes of the population, as well as maintaining a high level of the price index in the manufacturing industry in annual terms.
As a base scenario, the National Bank considered the oil price at $60 per barrel throughout the forecast period. The National Bank conducts forecasted rounds four times a year, during which the forecast of the main macroeconomic indicators, primarily inflation, is carried out for the medium-term period of the next seven quarters. Based on the forecasts and estimates received, the financial regulator takes decisions on monetary policy, including the level of the base rate. In 2017, the country's GDP grew by 4%, inflation was 7.1%.
Reported by ABC TV (Kazakhstan).
