BAKU, Azerbaijan, Mar. 31
By Nargiz Sadikhova - Trend:
Kazakhstan’s GDP is expected to grow by 3.2 percent in 2021, The World Bank’s Europe and Central Asia Economic Update, Spring 2021 report said, Trend reports citing the report.
The World Bank (WB) said that the current 2021 forecast is 0.7 percent higher than the projections published in January 2021. Furthermore, the forecast for Kazakhstan’s GDP growth in 2022 remains at the level of January projections, i.e. at 3.5 percent.
The bank said that economic growth in Kazakhstan is expected to rebound in 2021, 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.
“With the continued pace of recovery, the economy is expected to grow within 3-4 percent range in 2021. Private consumption spending is likely to pick up in 2021, driven by the release of pent-up demand as incomes rebound and retail lending continue apace,” the WB said.
Higher demand for housing is expected to support residential investment, as government programs would allow pensioners to use some of their savings to purchase a house or pay down mortgages, the report said.
“The government is likely to continue an expansionary fiscal stance in 2021 due to rising spending on social assistance, education, and infrastructure. The non-oil deficit is projected to decline to nearly 9.0 per-cent of GDP in 2021 but remains above the mid-term target of 6 percent. Government debt is likely to increase to 27 percent of GDP due to higher domestic borrowing and disbursement of external loans to finance the deficit,” the WB’s report said.
The WB added that inflation is expected to moderate in 2021, as supply disruptions and the crisis pre-cautionary food buying wane.
“However, an expansionary fiscal stance with significant direct lending provisions can sustain pressure on inflation. The current account deficit is projected to improve modestly, supported by stronger exports thanks to higher oil prices and rebound in global demand for oil and a gradual pick up in imports,” the WB said.
Despite growth recovery, the poverty rate is expected to decrease gradually before reaching a pre-crisis level of welfare, the report said.
“However, economic recovery could lose momentum if the progress on vaccination slows, mobility restrictions last longer, public investments delayed, and external demand is weaker than expected. Business insolvencies and layoffs could hit incomes, increase poverty, and expose the banking sector to higher NPLs,” the WB said.
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