Kazakhstan's Economic Growth to Moderate in 2020

2019-12-19 15:21

Kazakhstan’s real gross domestic product (GDP) growth is projected at 4.0% for 2019, before easing to 3.7% in 2020, according to the World Bank’s latest Kazakhstan Economic Update.

A solid performance in domestic demand supported annual GDP growth in 2019. Higher spending on social assistance and continued infrastructure investments helped sustain consumption and investments. Business investment has largely been driven by capital spending in the mining industry and buoyancy in residential construction.

Robust domestic demand, rising food prices, and a weaker exchange rate contributed to inflation fluctuations. The annual inflation rate rose to 5.5 percent in October 2019, slightly above the rate recorded the previous year, resulting in a tightening of monetary policy by the Central bank.

Growth will moderate in 2020, according to the report, as the impact of previous fiscal stimuli diminish gradually over time, and a weaker external environment increases vulnerability to economic shocks. Although global economic growth is expected to improve slightly in 2020, weaker-than-expected growth in the European Union (EU), Chinese, and Russian economies could rattle demand and the prices of commodities relevant to Kazakhstan’s exports. Continued weak demand for corporate lending and risk-aversion by banks present another downside risk to growth.

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