Kazakhstani financiers expect inflation to slow down to 8.8% by the end of this year

The AFK has interviewed financial experts / Photo: Shutterstock and Freepik

Experts of the financial market interviewed by the Association of Financiers of Kazakhstan (AFK) have predicted that the annual inflation will drop to 8.8% this year if the base rate is at 12.5%, the February survey by the AFK says.

By early March the USD exchange rate is expected at 455 tenge (457 in the January survey). The slight weakening of the American currency in Kazakhstan is due to the February taxation period, when businesses must pay corporate income, mineral extraction tax, export rental tax and other payments for 2023.

However, the experts warned that the high volatility of oil prices, lower attractiveness of financial instruments nominated in the tenge due to lower base rate and increasing payments to serve the external debt can cause a weakening of the exchange rate of the tenge to 478.3 per dollar.

Market participants also expect the Russian ruble to weaken to 97.2 per dollar by the end of this year as the rule demanding exporters to sell their foreign currency revenue is going to expire and the Ministry of Finance of Russia is about to restart buying foreign currency within the budget rule.

Expectations of oil prices at the end of 2024 have worsened to $83.9 per barrel of Brent oil compared to $85.4 in January. Interviewed experts believe that the oil market is going to reach a surplus of oil supply because the demand from the U.S. and China is likely to decline.

As inflation is slowing down in Kazakhstan, there is a chance that the National Bank will cut the base rate further: 83% of experts who took part in the survey forecast the regulator to do that. The vast majority of them (67%) expect the National Bank to lower the key rate by 25 basis points to 15%, while others say that the regulator will cut the rate by 50 basis points to 14.75%.

Thanks to the improving financial situation in conjunction with high oil prices and the implementation of big infrastructural projects, Kazakhstan’s economy can grow by 4.3% this year.

In turn, the country’s cabinet is expecting Kazakhstan’s economy to grow at least 5.3% this year. The Eurasian Development Bank forecasted growth at 5%, the U.N. at 4.8%, the Asian Development Bank at 4.3%, AERC at 4.2% and the International Monetary Fund at 3.1%.