National Bank is a bit less optimistic about economic growth than President Tokayev

The National Bank is expecting the GDP to grow by 4.2% to 5.2% / Photo: Shutterstock

According to a new report on monetary policy by the National Bank, GDP growth is expected at 4.2% to 5.2% this year and by 4% to 5% over the period from 2024 to 2025.

The regulator underlined that it has revised its previous forecast upward. In May 2023, the National Bank of Kazakhstan presented two scenarios for its forecast of GDP growth. The first one was pessimistic. It said that the country’s economy would grow by 3.2% to 4.2% in 2023 and 3% to 4% in 2024. The optimistic scenario said that the growth would be at 4.7% to 5.7% this year; 4.5% to 5.5% in 2024 and 4% to 5% in 2025.

«We are expecting more fiscal incentives aimed at the construction of infrastructural facilities and buildings for the educational system. The fact that budget expenditures are socially oriented will also support domestic demand. Moreover, the export increase rate is going to stay high over the period from 2024 to 2025 due to high oil output at many oil fields across the country, including the Tengiz oil field,» the regulator said in the report.

In turn, President Kassym-Jomart Tokayev has ordered the cabinet to ensure the economy is growing by 6% to 7% in order to double the GDP to $450 billion by 2029. He announced this task while delivering an address to the nation on September 1.

In addition, the National Bank is predicting the gradual elimination of the output gap, which is calculated as a percentage of deviation of the factual level of the GDP from its potential level. This may happen after 2025 and if it does it will happen thanks to a positive dynamic in domestic demand and an increase in exports due to high oil prices.

Concerning inflation, the national bank has revised its forecast in a downward direction. According to the new data, price surge in 2023 will be at 10% to 12%, 7.5% to 9.5% in 2024, and 5.5% to 7.5% in 2025. In August, for example, the inflation decreased to 13.1%.

This report was prepared while Galymzhan Pirmatov, ex-chairman of the bank, was in office. He was discharged on September 4. The new head of the National Bank Timur Suleymenov, who previously served as the minister of the national economy, said that it is quite likely for the base rate (currently 16.5%) to continue decreasing.