On May 26, the National Bank of Kazakhstan revised its inflation forecast upwards.
«Taking into account the expected price increase for utilities and fuel as well as high fiscal stimulus, a factor that was never taken into account before, we have revised our forecast,» the regulator said in a statement.
According to the updated forecast by the National Bank, the annual inflation is going to reach 11% to 14% in 2023, 9% to 11% in 2024 and 5.5% to 7.5% in 2025. The regulator’s target is 4% to 5%.
The National Bank assesses the indirect impact of price surges in fuel and utilities on the consumer price index in 2023-2024 to be at 1 to 2.5 percentage points. The regulator is expecting that inflation will slow down in the middle term.
«Inflation will continue to gradually slow thanks to the decline in food price in the global market and monetary-credit conditions, which are going to play the role of a restraining factor as long as the annual inflation is slowing down,» the regulator said.
The National Bank is also expecting that external inflation will be slower. This can happen once the state budget is consolidated and budget rules are applied once again. (This measure is expected in 2024-2025.)
On the other hand, the regulator believes that more budget stimulus, secondary effects caused by the surge in utilities and fuel prices and changes in logistical and production chains may drive inflation upwards.
In addition, the National Bank has improved its GDP forecast to 4.2% to 5.2% this year. At the end of February, the regulator expected the national GDP to grow by 3.5% to 4.5%. The forecast for the period from 2024 to 2025 remains the same.
«The current year forecast has been improved based on higher public costs and expectations of higher external and domestic demand. At the same time, the positive dynamic of imports, fiscal incentives and deterrent monetary-credit conditions will stabilize the GDP growth,» the National Bank underlined.
Experts the regulator has talked to also improved their forecast of the GDP growth from 3.7% to 4%. The IMF expects that Kazakhstan’s economy will grow by 4.3% in 2023 and 4.9% in 2024.
