EFSD forecasts growth of 5% in Kazakhstan's GDP, 10.9% in inflation in 2025

ASTANA. July 10 (Interfax) - The Eurasian Fund for Stabilization and Development (EFSD) forecasts Kazakhstan's GDP to grow 5% in 2025, according to the fund's Summer'25 regional economic review released on Thursday.

Real GDP growth should be 5% in 2025, with the main drivers of economic growth remaining the mining industry owing to ramping up oil output at the Tengiz field and the accompanying multiplier effect for transport and trade until the end of the year, according to the review.

The fund's analysts believe that implementing large investment and infrastructure projects, particularly those with government participation, should also stimulate growth in the non-resource sectors of manufacturing, trade, and construction.

The EFSD forecasts growth in GDP to slow to 4.5% in 2026-2027 owing to an expected weakening in budget stimulus.

The fund's analysts also expect a slowdown in consumer demand amid tight monetary policy and lending restrictions. The EFSD believes that additional measures on the part of the National Bank of Kazakhstan to increase minimum reserve requirements gradually for second-tier banks should also facilitate the slowdown.

Meantime, the EFSD is confident that the government's medium-term forecast to reduce inflation to 5% will not be achieved.

The forecast envisages growth of 10.9% in inflation by the end of 2025 amid faster growth in prices at the beginning of the year. The EFSD estimates that the inflation target of 5% will not be achieved in the medium term, and that inflation will likely remain at elevated levels of 9% in 2026 and 7.2% in 2027.

The fund cites housing and utilities reform, the increase in the VAT rate to 16%, as well as the persistently low coherence of monetary and budget policies, as the main inflationary drivers.

As reported, the National Bank of Kazakhstan has raised its estimate for growth in GDP to 5%-6% in 2025 owing to increased domestic demand and growth in investment activity, as well as for growth in inflation to 10.5%-12.5% in 2025.

The country's economy grew 4.8% in 2024 and 5.1% in 2023.

The EFSD was established in 2009 as a regional financial vehicle to promote the economic and financial stability of the participating governments that include Armenia, Belarus, Kyrgyzstan, Tajikistan, and Russia in addition to Kazakhstan.