"The current account deficit is expected to decrease in 2018, which is indicative of a reduction in imbalances in the economy. The improvement in the current account is facilitated by rising oil prices and increased production in the oil and mining sector," the information says. In 2019, according to the National Bank, the deficit will increase to 3.8% of GDP due to the lower average annual price of oil.
As noted in the message, the restraining factors of improving the current account remain the growth of imports of equipment and pipes due to the start of investment projects in the oil and gas sector, as well as an increase in payments to foreign direct investors as a result of joint investment projects.
"In 2018, the faster rate of growth in exports over the increase in imports of goods will contribute to an increase in the trade surplus, but in 2019, lower oil prices and an increase in the volume of imports of goods for the implementation of large infrastructure projects in the oil and gas industry will lead to a decrease in the trade surplus," the message says. Export of goods is a key component that determines the status of the current account. The main export goods are oil and gas condensate (59.8% in 2017), black (8.7%) and non-ferrous (10.1%) metals.
"Oil and gas condensate production is expected to reach 91 million tonnes this year and 93 million tonnes in 2019. The favourable situation on world commodity markets is maintained, and stable growth of economies in key export markets of Kazakhstan is expected. In 2018, the growth of exports of goods will be 37.4%. According to the scenario of a drop in oil prices in 2019 to $60 per barrel, exports are projected to decline by 1.1%," the press release explains.
The growth of imports of goods will continue throughout the forecast horizon. "Under the basic scenario, the increase in domestic demand will contribute to the growth of imports of goods by 8% in 2018 and by 10% in 2019," the information says. As noted in the report, consumer imports comprising 27.3% of total imports of goods in 2017, is the most sensitive component of imports. Changes in consumer imports are due to fluctuations in the exchange rate and the dynamics of consumer lending.
"At the same time, the dependence of intermediate and investment imports on the exchange rate is relatively low, which is due to a significant share of the goods imported for oil and gas investment projects. The implementation of such projects does not depend on changes in the exchange rate," the report says.
According to the National Bank, in the forecast period, an increase in the income balance deficit is expected. These dynamics are explained by the growth of incomes of foreign investors in the raw materials sector of the economy of Kazakhstan, which, in turn, is ensured by the stabilization of oil prices and the growth of oil production. Development of the forecast of the current account of the balance of payments is carried out four times a year within the framework of the forecast rounds of the National Bank for the purpose of making a decision on monetary policy.
The assumptions of the National Bank, the government of Kazakhstan and international analytical agencies are used as initial parameters of the forecast. The basic scenario of the forecasted round is the price for Brent crude at $60 per barrel starting from the fourth quarter of 2018, while the average price in 2018 is $70.9, in 2019 - $60.
Reported by ABC TV (Kazakhstan).
