In September and October, international development institutions in Central Asia changed their outlook toward economic growth in Kazakhstan to a more positive one. Among these institutions are the World Bank, European Bank for Reconstruction and Development (EBRD), Eurasian Development Bank (EDB), Asian Development Bank and International Monetary Fund (IMF).
In early October, the World Bank published its regular report on Europe and Central Asia where it assumed that Kazakhstan’s GDP growth is going to slow down to 3% this year, not 2% as previously predicted (the rate was 4.1% in 2021). There are several reasons for this decrease including a lower level of oil production, high inflation and stricter monetary policy in the country, according to the World Bank. All these factors have already caused fewer credit facilities for the public sector and forced consumers to cut their expenses. However, the bank is expecting that in 2023-2024 the country’s GDP will grow at 3.5% or even 4% due to the expansion project at the Tengiz oil field. However, these figures are achievable only if the Caspian Pipeline Consortium works smoothly.
The EBRD also improved its forecast for Kazakhstan’s GDP growth to 3% as the country gets more oil revenue while the national banking system reported thousands of new clients who are fleeing from Russia and Belarus after Western countries have imposed new sanctions there. The bank is expecting Kazakhstan’s GDP to grow at 3.5% next year, although in May the EBRD’s forecast was more careful: 2% for 2022 and 2.5% for 2023.
The EDB published the same forecast. Even though in May this development institute predicted growth at 2.5%, now its forecast for the GDP growth this year is slightly more optimistic – 3%. The bank said this is a good result given the current geopolitical situation.
On the other hand, the Asian Development Bank (ADB) downgraded its forecast for Kazakhstan’s economy from 3.2% in April to 3% in September. The bank believes that the country’s GDP will grow at 3.7% next year, which is slightly less optimistic compared to the previous forecast of 3.9% by the bank in April. “We have downgraded our forecast for the country’s economic growth due to weaker business confidence and lower business activity outside of the service sector,” the ADB said.
In contrast to all these development institutions, which are expecting Kazakhstan’s GDP to grow at 3% this year, the IMF is less optimistic. “We are expecting the country’s GDP at 2.5%-2.8% this year. In the middle term the rate is going to stabilize at 3.5%,” said Nicolas Blanchet, head of the IMF mission for Kazakhstan in early October.
In addition, the development banks demonstrate different views on the potential inflation rate in Kazakhstan, although they all agree that the rate is going to be in the double digits.
For instance, the EDB is expecting that the inflation rate will reach 16% this year in Kazakhstan. The ADB analysts say that the price surge in the country might be as high as 11.2% (earlier they forecasted 7.8% of inflation). The World Bank has pointed out that it is expecting inflation in Kazakhstan to hit 14%.
However, almost all of them do not doubt that inflation will be in the single digits next year. The ADB is expecting 7.5% inflation while the World Bank said the rate may reach 8.2% in 2023 and 6.3% in 2024.
The National Bank of Kazakhstan has also decreased its forecast for the GDP growth this year from 2.8%-3.8% to 2.5%-3.5% because large oil fields have temporarily stopped working due to maintenance and uncertainty that remains about the CPC operation. In 2023-2024 the regulator is expecting the economy will rebound to 4-5% of GDP growth.
The National Bank is also forecasting slowing the inflation to 7.5-9.5% in 2023 and 5.5-7.5% in 2024, even though the current rate is about 16-18%.