Briefing Notes for the Launch in Astana and Almaty, March 2009
Growth performance and medium-term prospects
- After averaging 10% annual growth from 2000 to 2007, the GDP of Kazakhstan grew
by 2.4% in 2008, which is much lower than the targeted goal of 6 to 7%. Industrial
output grew by 2.1% in 2008, down from the 4.5% recorded in 2007. The mining and
utilities sectors were leading drivers of growth in industrial production. The grain
harvest of 2008 was not as favourable as in 2007, and overall agricultural production
fell by 5.6% in 2008 compared with 2007. Oil and gas condensate production was
expected to come to 70 million tons in 2008, 4.4% higher than in 2007.
- Kazakhstan’s growth is expected to slow from an estimated 2.4% in 2008 to 1.5% in
2009, with decelerating inflation from 17.0% in 2008 to 8.5% in 2009.
Fiscal policy developments
- Due to the rapid growth of hydrocarbon production and massive oil revenue, budget
performance was strong in Kazakhstan. But the State budget of the economy was
expected to record deficits of over 2.2% of GDP in 2008. Additional spending on social
infrastructure could worsen the budget performances of the country in 2009. To cover
additional social spending from the oil sector, Kazakhstan plans to introduce a new
export tax on oil production, which will increase the tax burden on companies
developing the country’s natural resources and mainly target foreign energy
companies operating on a production-sharing basis.
- Tight liquidity and high inflation were the key monetary policy concerns for Kazakhstan.
Consumer price inflation reached 17.0% in 2008, the fastest rates since 2000. The
national currency, the tenge, was stabilized by drawing on the National Bank’s
reserves in the second half of 2007, when concerns over liquidity problems in the
banking sector sparked higher local demand for foreign currency. In August 2008 the
tenge was 4% stronger in nominal terms against the United States dollar than a year
earlier. However, the tenge was expected to be devaluated in the beginning of 2009.
Current account and trade performance
- Kazakhstan’s 2007 current account deficit was expected to revert to a surplus of 4.7%
of GDP in 2008. The merchandise trade surplus was expected to rise in response to
strong demand for the country’s oil exports. High oil prices increased the trade surplus
from $10 billion in the first nine months of 2007 to $28 billion in the corresponding
period of 2008. In the first three quarters of 2008, exports from Kazakhstan rose by
66.1% to $56 billion, and imports grew by 18.3% to $28 billion. The Russian
Federation remained the largest trading partner of Kazakhstan; China is an important
supplier of consumer goods.
- In November 2008 the Government announced a $17 billion action plan for 2009-2010
to stabilize the economy. The plan includes measures for financial sector stabilization,
development of the real sector, support for small and medium-sized enterprises,
development of the agro-industrial sector, and realization of industrial and
infrastructural projects. A new tax code introduced in January 2009 envisaged the
increase of the tax burden on companies developing the natural resources sector, with
the aim of reducing taxes for companies operating in other sectors, and cut the rate of
corporate profit tax.