Even though the updated outlook of the country’s socio-economic development for 2025-2029 forecasts a 6% increase in the GDP this year, analysts from Halyk Finance have downgraded their forecast from 4.5% to 3.9% in 2024.
Analysts have become more skeptical after noticing capital investments plummeting in Kazakhstan. According to the Bureau of National Statistics, over the period from January to May 2024, capital investments dropped by 6.5% year-on-year.
Another factor that contributed to downgrading Halyk Finance’s outlook was a decline in oil production. In early June, Platts Market Center reported that Kazakhstan’s oil output dropped in May to its four-year minimum. Both Russia and Kazakhstan have cut their oil production by 50,000 barrels per day to meet their obligations before OPEC+. However, they are still falling behind their target indicators.
Furthermore, Halyk Finance pointed out fiscal uncertainty and the high level of the base rate, which was cut to 14.5% by the National Bank at the end of May after keeping it the same in April (14.75%). At the time, the regulator explained the move by a slower-than-expected annual inflation decrease, high inflationary expectations and sustainable domestic demand. The National Bank has been gradually cutting the base rate since August 2023; before that, the rate had continued going up since November 2021. By 2026, the inflation rate is going to reach 5%, the National Bank predicted.
According to the experts, these negative trends are a quite significant obstacle to economic growth in the upcoming years.
«We were kind of surprised seeing the government’s current forecast for agriculture. In September 2023, they predicted 3.9% growth. Now, they are saying the economy would grow by 11.6%. On the other hand, the forecast for the mining industry was downgraded from 4.7% (in September) to 1.1%. A lack of justified explanations for such a dramatic change in the outlook for GDP growth and its components is a red flag for us,» Halyk Finance said.
Also, the Ministry of National Economy of Kazakhstan hasn’t provided statistical data on the GDP growth in January-April and January-May 2024, which also makes it difficult to analyze the economic situation or make any projections.
The transportation sector has shown a positive dynamic, while trade and industry are demonstrating moderate performance. There is a slight increase in the agricultural sector, signaling a gradual rebounding of the sector.
Based on all these factors, Halyk Finance has downgraded its outlook for Kazakhstan’s economic growth this year to 3.9%. Moreover, experts consider the government’s forecast for socio-economic growth in 2025-2029 as too optimistic and call on authorities to revise them based on the current economic environment and risks.
