Current economy of Kazakhstan
An IMF mission, led by Hossein Samiei, visited Almaty and Astana during May 13-26 to conduct the 2015 Article IV consultations. The mission met with government and central bank officials, and representatives of the private sector and civil society. In view of large and likely long-lasting external shocks, discussions centered on the policy response, including (i) the implications of the fiscal stimulus for medium-term sustainability and (ii) overhauling the monetary and exchange rate policy framework. The mission thanks the authorities and other counterparts for their hospitality and very helpful and productive discussions.
Outlook and risks
1. Against the backdrop of mostly external shocks, economic growth has decelerated, financial conditions have tightened considerably, and external imbalances are emerging. Real GDP growth slowed to 2.2 percent year-on-year in the first quarter of this year, down from 4.3 percent in 2014 and 6 percent in 2013, driven by spillovers from the slowdown in key trading partners, lower oil prices and output, and weaker domestic demand. Bank lending growth has also decelerated sharply and latest figures point to a nominal contraction in private sector credit of about 1 percent year-on-year. As a result inflation has been falling, reaching 4.6 percent year-on-year in Aprilâ€”well below the authoritiesâ€™ objective range of 6â€“8 percent. Despite weaker domestic demand, we project a current account deficit of around 4 percent of GDP by end-2015, primarily because of lower revenues from oil exports. At the same time, the propensity for speculative currency attacks in the context of a tightly-managed exchange rate has contributed to an increase in dollarization over the past year.