Kazakhstan National Bank raises 2024-2025 GDP forecast, maintains forecast for 2023

ASTANA. Aug 25 (Interfax) - The National Bank of Kazakhstan raised its forecast for the growth of the country's economy for 2024-2025 to 4-5% per year from the previous outlook of 3.5-4.5%, the regulator said, citing updated macro forecasts.

This year, GDP growth, as before, should be approximately 4.2-5.2%.

"Forecasts for the growth of Kazakhstan's economy in the medium term have improved. An expansion of business activity will occur due to stable domestic demand, growth in budget spending and the recovery of the oil sector. Risks to the GDP forecast are related to possible problems with access of Kazakhstani exports to international markets, as well as the possibility of not achieving planned oil production," the report says.

In addition, the inflation forecast has been adjusted. In the short term, uncertainty about price growth has decreased. In the baseline scenario, inflation is forecast to be in the range of 10-12% this year (previously 11-14%); 7.5-9.6% in 2024 (previously 9-11%), and 5.5-7.5% in 2025 (same as previous forecast).

"Meanwhile, without considering the direct effect of the increase in utility tariffs, to which the National Bank does not respond by changing the base rate, the achievement of a medium-term goal [for inflation] of 5% is expected by the end of 2025. This will be facilitated by further easing of pressure from the external environment and monetary conditions, which are in the containment zone," the statement said.

The primary inflation forecast risks include increased fiscal stimulus, the "non-anchoring of inflation expectations," acceleration of inflation in Russia and a possible increase in world food prices because of the non-resumption of the Grain Deal, the National bank says. In addition, one of the risks of the forecast is the continuation of pricing reforms in the Kazakhstani fuel and lubricants market.

At the end of 2022, the economy of Kazakhstan grew 3.1% with inflation of 20.3%.