EDB expects 3.3% fall in economic growth of Kazakhstan in 2019 due to reduction of oil production

AKIPRESS.COM - In 2018 Kazakhstan's GDP growth rate stood at 4.1%, the Eurasian Development Bank said in its Eurasian Economic Integration report.
Economic growth was supported by increased oil production and a favourable pricing environment in the global energy market.
Robust credit activity encouraged expansion of consumer and investment demand. Individual sector contributions to the general economic growth changed throughout the year.
During the first half of 2018, the key GDP growth drivers were high rates of growth of oil production and processing-industry output.
During the second half of 2018, the importance of industry as a GDP growth driver declined, while trade turnover and construction grew at a brisk pace. At the end of 2018, the inflation rate stood at 5.3% year-on-year, well within the target range set by the National Bank of Kazakhstan (NB RK) (5-7%).
A significant role in deceleration of inflation was played by reduction of prices for automotive fuel upon completion of modernization of the country's leading refineries, and reduction of prices for electricity and heat paid by the population. With inflation decelerating throughout 2018, the NB RK repeatedly lowered the base rate, which by the end of the year reached 9.25% vs. 10.25% the year before. The KZT/USD and KZT/EUR exchange rates decreased by the end of 2018.
Changes in the exchange rate of the Kazakhstani currency followed the general pattern displayed by national currencies of countries with emerging economies - the tenge weakened on the back of US Federal Reserve rate hikes and a general increase in economic and political risks worldwide.
In 2018 Kazakhstan reported a consolidated budget surplus for the first time since 2015. The improvement was attributable to higher budget
revenues in a relatively favourable external environment, economic growth, and reduction of public expenditures for rehabilitation of the
national banking system relative to 2017.
The EDB expects that in 2019 the economic growth rate will decrease to 3.3% due to reduction of oil production caused by scheduled production facility repairs. Subsequent GDP growth is projected at 3.5%. It is anticipated that in 2019-2021, inflation will remain within the NB RK target range (4-6%), gradually sliding down to its lower limit as KZT interbank rates are maintained close to the neutral level that we estimate at 7.5-8%.