EBRD: Kazakh Economy to Grow 4.2% Next Year Amid Inflationary Pressures and Commodity Prices Uncertainty

The Kazakh economy is projected to expand by 3.9% in 2023 and 4.2% in 2024, with persisting inflationary pressures and uncertainties surrounding oil and commodity prices posing downside risks to the country’s economic growth, according to the European Bank for Reconstruction and Development (EBRD) latest Regional Economic Prospects report published on May 16.

Despite periodic disruptions at the Caspian Pipeline Consortium’s terminal in Novorossiysk, which hampered the country’s oil exports, the Kazakh economy grew by 3.2% year on year in 2022.

According to the report, in the first quarter of 2023, growth accelerated to 4.9% year-on-year, led by significant gains in construction – 18%, fixed capital investment – 16.1% and retail trade turnover – 12.1%. Industry (2.8%) and agriculture (3.5%) posted lower growth rates.

As for inflation, annual consumer price index (CPI) inflation peaked at 21.3% in February this year before dropping to 18.1% in March. Despite the National Bank’s efforts to tighten its monetary policy and scale back its involvement in financing post COVID-19 stimulus programs, inflationary pressures persisted amid rising transport, food and commodity prices.

The report states that Kazakhstan’s economic outlook benefits from the relocation of foreign firms, investment in new activities related to the exit of major global players from Russia, and ongoing efforts to diversify transport and oil transit routes.

According to the report’s forecast, if implemented, the country’s planned reforms to improve the business climate, reduce entry barriers to the economy’s heavy sectors, and minimize the footprint of politically exposed figures in the economy will promote foreign direct investment and the development of small and medium-sized enterprises in the medium term.