ECONOMIC OVERVIEW
Minister of Economy and Budget Planning: Mr. Bakhyt Sultanov
Minister of Industry and Trade: Mr. Asset Issekeshev
Minister of Energy and Mineral Resources: Mr. Sauat Mynbayev
Minister of Finance: Mr. Bolat Zhamishev
Minister of Transport and Communications: Mr. Abelgazy Kussainov
Minister of Environment: Mr. Nurgali Ashimov
Minister of Agriculture: Mr. Akylbek Kurishbayev
Chairman of National (Central) Bank: Mr Grigory Marchenko
Executive Summary
- After a decade of exceptionally strong economic growth and development, Kazakhstan’s ability to withstand shocks has been tested since the onset of the global liquidity crisis in 2007. Against expectations by many, appropriate policy responses and strong financial ratios have enabled Kazakhstan, which was identified as being among the worst affected, to avoid a severe banking crisis with a run on deposits, a currency crisis and depletion of FX reserves and a recession.
- Prudent macroeconomic policies in recent years have strengthened the authorities' position from which to navigate the financial storm. However, with the deteriorating global economic outlook and the sharp fall in oil prices, economic and financial risks remain high. The government has adapted its expectations to the deteriorated environment (GDP growth in 2009 is now forecast at 0,1%) while it continues strongly committed to mitigate the negative impact of the global crisis on Kazakhstan’s economy.
- The government’s key priorities for the next two years include the stabilisation of the financial sector, supporting the small and medium sized enterprise (SME) sector, develop the agro-industrial sector and the real estate market, advance the diversification of the economy, boost employment and support socially vulnerable groups of the population.
- Fiscal policies, despite the government’s planned support for the economy, remain prudent. The original oil price assumption in the 2009 budget of US$60 pbl has been revised to US$50 pbl. and contingency plans have been made in case oil prices fall to US$25 pbl. The consolidated fiscal balance in 2009-10 is forecast to continue to show moderate deficits, if smaller than previously due to low oil prices. State budget balances planned at around 3.6% of GDP in 2009 should be comfortably financed given the amounts of government’s assets and low debt levels.
- Inflation has set on a rapid declining trend and ended as of January-August 2009 of 6.2%, compared with the same period of 2008 of 20.1%. Despite the recent devaluation of the tenge, inflation is expected to remain around 9% in the near-term on the back of slowing growth of monetary aggregates and the slowdown in economic activity.
- External liquidity position strengthened in 2008 as a result of improved balance of payments dynamics. Although the current account is expected to show a deficit in 2009 due to low oil prices, FDI inflows will continue to fund most of the external gap.
- Long-term prospects remain good given Kazakhstan’s vast endowment of natural resources and the government policies to support the economy’s diversification through infrastructure development and improvements to the business environment.
