Kazakhstan macro: financial sector to be increasingly important for growth, with an emphasis on inflation and rates
In line with an estimate by the National Bank of Kazakhstan concerning the country’s GDP growth at 3.1%, the country’s Ministry of Economy mentioned a similar figure. The National Bureau of Economic Statistics reported that in 9M22, the country’s GDP increased by 3.0%. Therefore, based on this number, the 3.1% GDP growth in 2022, as a whole, appears more or less consistent. One cannot rule out that the economic situation in Kazakhstan looked somewhat better than officially reported. The official statistics pointed to an acceleration of y-o-y growth of the short-term indicator in December (this indicator is a monthly proxy of the overall economic activity that covers over 60% of it). This acceleration may have been a pure accounting effect as December's “acceleration” may have originated because, statistically, the last month of the year could have included some activities unaccounted for in previous months.
The contribution of the financial sector to economic growth rose in 2022. According to the National Bank of Kazakhstan, total credit to the economy expanded by 20.6% in 2022, which was comparable with inflation. It might look as though lending didn’t grow much in real terms, and that its role in supporting economic growth was marginal, but the situation differed by sector. For example, corporate lending in 2022 grew by just 10.4%, while consumer lending expanded much faster (by 31.3%). Mortgages expanded by 41.9% last year, and it is not surprising that the construction sector grew rapidly in 2022. Government borrowing also rose. However, the total debt-to-GDP ratio is low. Future risks stem from the high costs of borrowing. Kazakhstan’s bond market and bank lending will grow faster than GDP, therefore playing an increasingly important role in the country’s economy. Tackling inflation will become the main objective of macroeconomic policy.
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