The Applied Economic Research Center (AERC) projects a 4.5% growth in Kazakhstan’s economy in 2024. This forecast, however, is accompanied by an expectation of deteriorating budget parameters and a slowdown in inflation reduction.
The AERC’s analysis employs a combination of two models. The aggregated demand model predicts a real GDP growth of 4.6%, an increase from the previous 4.2% prediction. On the other hand, the aggregated supply model forecasts a slightly lower growth rate of 4.4%, up from the earlier 4.3% estimate.
Influencing factors
The AERC’s forecast takes into account several factors, including future oil prices, inflation rates, and economic growth in Kazakhstan’s trading partner countries. In 2024, the average cost of a barrel of oil is projected to be $85, down from the previous forecast of $88 made in October.
The economies of Kazakhstan’s main trading partners - Russia, the EU, and China - are expected to grow by 1.7% in 2024, consistent with the previous forecast. Furthermore, oil and gas condensate output in Kazakhstan is anticipated to reach 88 mn tons this year, up from the previous 86 mn tons.
Exchange rate and inflation
The research centre anticipates that the average exchange rate of the dollar will be KZT 473.2 in 2024. Under this scenario, the average annual consumer inflation is expected to be 8.8% y/y, a slight increase from the previous forecast of 8.6%.
This increase can be attributed to the expected higher inflation in Russia and a significant increase in Kazakhstan’s money supply. For instance, the sharp surge in money supply in December 2023 could potentially boost inflation later this year.
Fiscal balance
Regarding the fiscal balance, which represents the difference between the budget’s revenue and expenditures as a percentage of the GDP, the AERC forecasts the rate at 5.7% of the GDP or $14.2bn. Meanwhile, the budget deficit is expected to be $14bn, equivalent to 5.5% of the GDP.
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