ADB improves Kazakhstan’s economic growth forecast

The Asian Development Bank improved its growth expectations for Kazakhstan’s economy, indicating that it may reach 4.1% in 2023 and 4.3% in 2024, compared to the 3.7% and 4.1% announced in April.

The improvement in expectations is due to higher consumption and investment amid increased government spending on modernizing infrastructure and social programs.

“The government-approved increase in retail gasoline and utility prices must also play a role. Due to these measures, inflation will be higher than previously expected but will still maintain its decelerating trend,” the Asian Development Bank explained.

“Inflation is expected to reach 12.7% this year and 7.6% next year, up from April forecasts of 11.8% and 6.4%, respectively. The Asian Development Bank notes that the tightening of trade and investment sanctions against Russia, an important trading partner of Kazakhstan, poses downside risks to the outlook,” the Asian Development Bank said.

“In the first half of the year, in all countries of Central Asia and the Caucasus, with the exception of Kazakhstan and Tajikistan, economic growth slowed compared to the period from January to June 2022,” the Bank noted.

Meanwhile, activity remained high due to domestic demand. It is expected that the region’s GDP growth will reach 4.6% at the end of this year and 4.7% next year (according to the April version, 4.4% and 4.6%, respectively).

Kazakhstan became the only country in the region that recorded an acceleration in inflation in the first half of the year.

In other countries, it has been possible to slow down due to stable import prices. In general, in Central Asia and the Caucasus, inflation, according to forecasts from the Asian Development Bank, will reach 10.6% this year and 8% in 2024. Future results largely depend on external factors, including the dynamics of price growth in the countries that are our main trading partners.