IMF says Kazakhstan preserved robust growth in H1 2019 despite slowdown in oil production

AKIPRESS.COM - Economic growth in Kazakhstan remained robust in the first half of 2019, despite a slowdown in oil production driven by capital repairs in major fields, the International Monetary Fund reported upon completion of its mission in the country on July 16.
The IMF staff discussed with authorities about growth and inflation outlook, monetary policy and operations, the financial sector, the fiscal framework, and structural reforms.
A strong pick-up of activity was recorded in manufacturing, services, and construction. Inflation stood at 5.4 percent in June, higher than in previous months, but still within the National Bank's (NBK) 4-6 percent target band. Higher exports and lower FDI-related income payments supported the external current account, which posted a Q1 surplus.
Outflows related to government and quasi-sovereign debt repayments and portfolio investments caused NBK reserves to decline in Q1; they recovered partially in Q2. In the absence of shocks, the team projects growth of 3.8 percent in 2019 and slightly higher next year, with recovery in the oil sector. Risks to the outlook stem from commodity prices and geopolitical and trade tensions involving major trading partners.
The tenge has been broadly stable, supported by favorable external conditions, although there have been occasional short-term pressures. The NBK cut the policy rate in April and left it unchanged in June and July. Credit to the economy has continued to decline, reflecting loan write-offs and weak demand by corporate borrowers. Household credit has grown steadily. Deposit auctions were introduced to replace 7-day NBK notes; other changes have aimed to increase the effectiveness of monetary policy, including increasing the average maturity of NBK notes and longer-end yields and simplifying reserve requirements.