Eurasian Development Bank improves its forecast for Kazakhstan’s economy

The Eurasian Development Bank (EDB) has improved its forecast of Kazakhstan’s GDP growth this year to 4.8% in its latest macroeconomic survey. In July, the bank estimated the country’s GDP to grow by 4.3%.

Kazakhstan is ranked third in the EEU, which includes Russia, Belarus, Kyrgyzstan, Armenia and Tajikistan, and Central Asia in terms of economic growth after Armenia (8.3%) and Tajikistan (8.2%). The economy of Kyrgyzstan, Belarus and Russia is expected to grow by 4.6%, 3.9% and 3.1%, respectively.

Aggregated inflation in the region is going to reach 7.8% by the end of the year. (In November, Kazakhstan reported a price increase of 10.3%.) Inflation is expected to drop to one-digit figures after a sharp hike last year thanks to weaker pressure from the external sector and monetary policy by the region’s countries.

The EDB is forecasting that Kazakhstan’s economy will show confident growth of 5% next year, while in all other countries of the region, this growth will stabilize. It is going to be at 5.8% in Armenia, Kyrgyzstan and Tajikistan and 1.5% and 2% in Russia and Belarus, respectively. Kazakhstan’s economic growth will be driven by supportive investment-oriented policy. Aggregated inflation in the region is going to reach 5.8% by the end of 2024. In Kazakhstan, the rate will be at 7.1%, which is going to be the third highest in the region. The average annual exchange rate of the U.S. dollar is expected at 470 tenge.

The bank also believes that the base rate of the National Bank may plunge to 10% by the end of next year. Currently, the rate is at 15.75%. From December 2022 to August 2023, the base rate was at 16.75%, the highest rate in Kazakhstan’s history. At the time, the regulator wanted to slow down inflation, although it switched to a rate-cut cycle later.

On December 13, 2023, the Asian Development Bank (ADB) also issued a report that forecasted Kazakhstan’s economic growth at 4.5% this year. (In September, ADB forecasted 4.1% growth). In 2024, this rate is expected to be at 4.3%. However, the ADB noted some risks such as high base rates in the U.S. and other developed countries that probably will be considered by investors as more attractive markets compared to developing countries, high pressure on national currencies and supply chain disruptions due to El Nino weather and the war in Ukraine.

In turn, the International Monetary Fund (IMF) forecasted in October that Kazakhstan’s economy would grow by 4.6% this year, a slight decline compared to the 4.8% forecast in July. In a May survey of socio-economic development, the IMF said that this year the country’s GDP would grow by 4%. In the middle of November 2023, Minister of National Economy Alibek Kuantyrov told President Kassym-Jomart Tokayev that the GDP would grow by 5%.