Kazakstan
Date: 10 May 2012
The event will be held in Almaty , Kazakhstan , with the participation of distinguished participants from academia, government, civil society, international organizations, and the press. The list of well known participants making opening remarks, presentations and commenting on the publication includes:
Mr. Igor Musalimov
Ministry of Foreign Affairs
Mr. Valikhan Tuleshov
Deputy Director, the Institute of World Economy and Policy
Mr. Uraz Baymuratov
Director of the Scientific Research Institute of Financial-banking Management,
T. Riskulov Kazakh Economic University
Mr. Amanzhol Koshaev
National Academy of Sciences of Kazakhstan
Nikolay Pomoshchnikov
Head, ESCAP Subregional Office
for North and Central Asia
Almaty, Kazakhstan
Country briefing note <download pdf file>
Strong growth momentum is maintained
• The economic growth continued to be strong at 7.5% in 2011, after 7% in 2010, mainly driven by the oil-related manufacturing and services sectors.
• Robust external demand for oil and mineral products and improved domestic conditions, including decent real wage growth, low unemployment and continued government investment supported growth.
• A sharp increase in the grain harvest boosted agricultural output, enabling the sector to rebound from the 2010 drought.
• GDP growth is expected to continue to be robust at 6.2% in 2012, owing to ongoing strongly funded investment projects in the oil and mining sectors.
• Sluggish external demand in the euro zone and the Russian Federation and financial sector weakness are the key downside risks to growth.
• Volatile commodity prices are also likely to have a negative impact on the economy given its continued high reliance on exports of natural resources, mostly on oil exports.
A high inflation in 2011 starts to decelerate
• Consumer prices increased 8.3% in 2011, above the central bank's inflation target band of 6-8%. Inflation was mainly driven by a double-digit increase in food prices during the first half of the year.
• The central bank raised the refinancing rate by 50 basis points to 7.5% in March 2011, but easing inflationary pressures allowed it to cut the rate back to 7% in February 2012.
Rise in government revenue narrows fiscal deficit
• The budget deficit slightly improved to 2.2% of GDP in 2011 from 2.5% of GDP in the previous year.
• Government revenue rose, supported by higher oil prices and a hike in the oil export duty as well as sustained strong economic growth. It is also boosted by a n increase in tax revenue stemming from the introduction of a progressive income tax, which came into effect at the start of 2011 and replaced the old flat-rate income tax.
• The increased government expenditure mainly targeted social security benefits and education.
A large trade surplus supports a healthy current account position
• Kazakhstan maintained its current account surplus in 2011, equivalent to 4.4% of GDP, owing to a large trade surplus that was boosted by rising oil production volumes.
• The central bank formally abolished its trading band for the national currency and introduced a managed float system in February 2011, though it continued to intervene in the foreign exchange market for fear of rapid appreciation.
• In August 2011, the central bank started to buy refined gold products in the country to restock its gold reserves and to ease its exposure to the dollar. This action pertains to the country's increasing concern about the sovereign debt crisis in the euro zone and its potential effects on the developed world.
Heavy dependence on the energy sector: need to further diversify the economy
• The economy is highly dependent on exports of oil and gas. Consequently, a sharp fall in external demand or commodity prices would lead to a severe decline in economic activities and, in turn, have a strong impact on economic growth. Therefore, further diversification of the economy is important for achieving higher and sustainable growth as well as greater socio-economic stability.
• Countries with heavy commodity dependence must design and implement policies aimed at reducing their dependency. This is easier to accomplish during the boom years when fiscal and external positions are healthy.
• Progress towards diversification requires strong enforcement of market competition laws as well as relevant investment in infrastructure, which could potentially improve the business environment and contribute to the development of new high value-added export-oriented sectors.
• Government's five-year industrial development plan aims to make the economy less dependent on commodity exports. This is to be achieved through improving labour productivity by investing in training and upgrade of infrastructure.
Policy brief: Living with high commodity prices <download pdf file>