EDB slightly lowers GDP growth forecast for Kazakhstan in 2024, downgrades inflation expectations significantly

ASTANA. June 20 (Interfax) - The Eurasian Development Bank (EDB) expects the economy of Kazakhstan to grow 5% in 2024, the EDB June macroeconomic review says.

The bank had forecast the country's GDP growth this year at 5.1% in February.

"We still believe that measures taken by the government to attract foreign direct investment into Kazakhstan will catalyze economic growth. The country is planning to launch 400 new investment projects worth KZT 4.6 trillion over 2024, building capacity in the manufacturing, agriculture, energy, transport, and services sectors," the review says.

EDB analysts say that increased activity in these sectors will compensate for zero growth in the oil industry, which will be partly determined by Kazakhstan's obligations under the OPEC+ agreement.

"Fiscal policy will also support the economy," the review says.

Kazakhstan's GDP growth for 2025-2026 is projected at 5.5%.

This will be "encouraged by a return to positive growth in oil production and exports as OPEC+ restrictions are eased. We also believe that the expected loosening of monetary conditions will less and less constrain the momentum of economic activity. The structural changes the country has planned will result in higher potential growth," the analysts say.

According to EDB forecasts, inflation in the country will be 8.3% (in the February review it was estimated at 7.1%) for the year, while it will be 6.3% in 2025, and 4.8% in 2026.

The base rate by the end of 2024 will be above 13% (in February it was expected to be 10%) with a subsequent reduction to 7.75% by the end of 2026 (the National Bank of Kazakhstan reduced the base rate to 14.5% in May).

The tenge exchange rate will be close to current levels, and will be 447 tenge/$1 on average for the year, the EDB said.

As reported, Kazakhstan's GDP grew 5.1% in 2023.