Adverse external factors caused growth to slow to 4.3% in 2014 in Kazakhstan from 6.0% a year earlier, but currency devaluation in February 2014 strengthened budget revenues and the current account balance while adding to inflation. Growth is projected to slow further to 1.9% in 2015 before recovering to 3.8% in 2016. Inflation should ease, but weak oil prices will turn the current account into small deficits in both years.
|Selected Economic Indicators (%) - Kazakhstan||2015||2016|
|Current Account Balance (share of GDP)||-1.0||-1.3|
Source: ADB estimates.
Growth moderated to 4.3% in 2014 from 6.0% in 2013, mainly because slow global growth cut demand for Kazakhstan’s main export commodities: oil, coal, metals, chemicals, and grain. Conditions worsened with a sharp decline in oil prices and spillover from sanctions on the Russian Federation, a major trading partner.
Despite the launch of the Eurasian Economic Union with Armenia, Belarus, and the Russian Federation, growth is forecast to slow to 1.9% in 2015. This reflects slumping oil prices, economic weakness in the Russian Federation, and tenge appreciation against the ruble, which has hurt the competitiveness of Kazakh exports and boosted imports from the Russian Federation. Growth is projected to recover to 3.8% in 2016 as the economy adjusts to low oil prices and as stimulus measures take hold.
Excerpted from the Asian Development Outlook 2015.