The Applied Economic Research Center (AERC) is forecasting that Kazakhstan’s economy will grow by 4.5% in 2024, although it also expects budget parameters to get worse while lowering inflation slows down.
The think tank’s analysis is based on a mix of two models: under the model of aggregated demand, the real GDP growth is expected at 4.6% (previously at 4.2%), while under the model of aggregated supply — 4.4% (4.3%).
Also, the AERC forecast draws on a set of factors such as future oil prices, inflation and economic growth in countries that are trading partners with Kazakhstan. In 2024, a barrel of oil is going to cost $85 per barrel on average ($88 under the previous forecast made in October); economies of Kazakhstan’s trading partners (Russia, the EU and China) are expected to grow by 1.7% in 2024 (the same rate as for the previous forecast), while oil and gas condensate output in Kazakhstan will reach 88 million tons this year (86 million).
Also, the research center believes that the dollar’s exchange rate will be at 473.2 tenge in 2024 on average. Under this scenario, the average annual consumer inflation is going to be at 8.8% year-on-year (8.6% under the previous forecast). This increase over the previous forecast can be explained by the expectation of higher inflation in Russia and a sharp increase in the money supply in Kazakhstan. For example, the sharp surge in money supply in December 2023 can boost inflation later this year.
Concerning the fiscal balance, which is the difference between the budget’s revenue and expenditures as a percentage of the GDP, the AERC forecasts the rate at 5.7% of the GDP or $14.2 billion, while the budget deficit is expected to be $14 billion (5.5%) of the GDP.
