NUR-SULTAN

Kazakhstan has revised its Gross Domestic Product (GDP) growth projection to 4.1-4.4 percent from a previous forecast of 3.9 percent in 2022 backed by the weakening impact of the COVID-19 pandemic and increase in oil production.

The Central Asian country’s economy returned to growth in the first half of 2021 after months of contraction supported by the strong performance in manufacturing, pharmaceuticals, construction and the production of construction materials.

In January-July of 2021, GDP grew by 2.7 percent year-on-year after 2.3 percent growth in the first half of this year and a contraction of 1.4 percent in the first quarter.

The country’s National Bank said that economic growth this year would be in a range of 3.5-3.8 percent.

“The acceleration in economic growth (in 2022) will be accompanied by a weakening impact of the pandemic on economic activity and an increase in oil and gas condensate production as a result of the gradual relaxation of OPEC+ restrictions,” the central bank said in a statement.

As the COVID-19 pandemic disrupted production as well as demand for oil, OPEC+, a group of the Organisation of the Petroleum Exporting Countries (OPEC) and allied producers of which Kazakhstan is a member, cut output by a little more than 7 million bpd to support prices and reduce oversupply. Other former Soviet oil-producing countries, Russia and Azerbaijan, are also OPEC+ members.

In July, the OPEC+ ministers decided to increase total production from August by 400,000 bpd every month and went further by deciding to increase production by another 400,000 bpd from October. The decision has been made amid a rising number of the COVID-19 infections across the world and developments on the oil markets.

The state budget for 2022 is based on an average oil price of $60 per barrel, up from $50 per barrel this year, while the budget deficit is projected at 3.3 percent of GDP, down from 3.5 percent expected this year.

The National Fund’s assets are projected to increase from $55.3 billion in 2022 to $61.6 billion in 2024.

The Asian Development Bank (ADB) increased its economic growth forecast for Kazakhstan to 3.4 percent from 3.2 percent in 2021.

By comparison, the International Monetary Fund said in April that Kazakhstan’s GDP was forecast to grow 3.2 percent in 2021 and 4.0 percent in 2022. Annual inflation is projected at 6.4 percent this year and 5 percent in 2022.

The World Bank’s latest projections were also optimistic. It forecast that growth will rebound to within 3 to 4 percent growth in 2021 and 3.5 percent expansion in 2022, driven by the resumption of domestic activity, recovery in global demand for oil, continued fiscal support measures, and a successful national inoculation against the COVID-19 virus.