Kazakhstan’s gross domestic product growth is forecast to reach 2.4% in 2017 and 2.2% in 2018, from the 1% registered in 2016, according to a new Asian Development Bank (ADB) report. Entitled Asian Development Outlook (ADO) 2017, the report notes that annual inflation in 2017 is projected at 8% — within the National Bank’s target range of 6-8% — as authorities adjust the policy rate, use open market operations to control monetary growth, and maintain monopoly price controls.
The ADO suggests industry will rise by 2.4% in 2017, boosted by high infrastructure spending and increased production of oil and gas condensate. Oil production is expected to expand by 3.8% to 81 million tons with higher production at the Kashagan oil field compared to last year, and expansion of the Tengiz oil field. Agriculture is projected to grow by 3.5%. ADO however highlights the need to strengthen the banking sector and improve transparency and communication to make ongoing efforts in the sector more effective.
The revenues of the country’s banking sector dropped 40 percent in 2017, reports ranking.kz. In January to July 2017, total Kazakh banking sector revenues decreased to 17.8 trillion tenge (US$52.7 billion) compared to the same period last year, when the revenues reached 29.6 trillion tenge (US$87.6 billion).
However, banks reduced expenses and increased revenues from core activities. Expenses for the first six months of the year stood at 17.9 trillion tenge (US$52.9 billion), which is 38.9 percent less than in the same period last year, when the number was 29.4 trillion tenge (US$87 billion), says the source.
But things change in the banking landscape, as in July, Halyk Bank, Kazakhstan’s largest lender paid 185 bn tenge ($560m) for 96.8 per cent of the shares in Kazkommertsbank, the country’s second-largest lender.
Policymakers hope the deal will stabilise the country’s fragile banking sector, which struggles with non-performing loans, accounting for 12 per cent of the $80 bn worth of assets held by Kazakh banks.
Apart from ADO, another report confirming that Kazakhstan’s economic growth is projected to accelerate in 2017 is World Bank’s latest Kazakhstan Economic Update. The World Bank expects Kazakhstan’s economic growth to hover around 3 percent a year from 2017-19, owing to higher oil prices and oil production.
Last year, Kazakhstan’s economy continued to suffer from a protracted slowdown in global oil prices and weak domestic demand. Real Gross Domestic Product (GDP) growth slowed from 1.2 percent in 2015 to 1 percent in 2016.
Finally, according to the IMF "World Economic Outlook" report Kazakhstan’s economy is projected to rise by 2.5 percent in 2017, as a result of higher oil production and stronger external demand.
GDP annual growth rate in Kazakhstan averaged 4.97 percent from 1995 until 2017, reaching an all time high of 14.10 percent in the second quarter of 2001 and a record low of -9.20 percent in the third quarter of 1995.
On 29 August, the government approved the 2018 budget, which includes a fiscal deficit of 1.1% of GDP and plans to stop using the National Fund to support the economy, according to Focus Economics.