NUR-SULTAN

Kazakhstan expects economic growth to accelerate to 3.7-4 percent this year as the economy continues to grow and get closer to pre-pandemic levels in the first nine months, supported by a strong performance in services, communications, construction and trade.

Gross domestic product (GDP) grew by 3.4 percent year-on-year in January-September backed by a 3.5 percent growth in the real sector, 2.9 percent growth in services.

“The National Bank expects the GDP growth of 3.7-4.0 percent by the end of 2021 given the average oil price of $70 per barrel,” Yerbolat Dossayev, the bank’s chairman, told parliament.

The oil price was in the range of $68 per barrel in the first nine months of 2021.

Dossayev said that the fast recovery of global and national economies was possible thanks to fiscal stimulation programmes and loose monetary conditions.

“At the same time, these factors led to a recovery in commodity demand and the considerable increase in inflationary pressure around the world,” he said.

Kazakhstan’s economy first returned to growth in the first half of 2021 after months of contraction. In the first quarter of this year, the economy contracted by 1.4 percent.

The country’s priority oil sector has been demonstrating lower than projected figures amid the OPEC+ oil production restrictions – Kazakhstan produced 56.1 million tonnes of oil and gas condensate in the first eight months of 2021, slightly down from projection.

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 April 2021, members of the group agreed to ease cuts gradually by 350,000 bpd in May, another 350,000 bpd in June and around 450,000 bpd in July.

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

The new deal agreed this month envisages a further increase by another 400,000 bpd “until the parties agree to lift the restrictions”.The OPEC + quota for Kazakhstan in October will amount to 1.524 million barrels per day, and every month production will increase by an average of 16,000 barrels per day.

The International Monetary Fund said this month that Kazakhstan’s GDP was projected to grow 3.3 percent in 2021 and 3.9 percent in 2022.

According to the World Bank’s latest projections, the economy is expected to grow 3.5 percent in 2021 followed by 3.7 percent growth 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.

In July, the Asian Development Bank revised Kazakhstan’s economic outlook forecast upwards to 3.4 percent from 3.2 percent in 2021. The ADB said Kazakhstan’s 2022 growth forecast would stay at 3.5 percent.