Kazakhstan macro government outlook: strong economic growth amid a favorable external environment and real tenge appreciation in 2024-2028
The Kazakh government recently released its medium-term economic forecast and budgetary plan for 2024-2028. The government also confirmed that it has turned much more optimistic about economic growth this year than earlier. It now expects GDP to grow by 4.6%-4.7% this year and 5.3% next year, followed by 5.6% growth in 2025 and 6.0% in 2026-2028. The National Bank of Kazakhstan has similar expectations. Generally, the authorities expect that inflation will stay close to 10% or slightly higher this year and will slow down to 6-8% in 2024. In 2025 it will decelerate to 5.5%-7.5% and then will hold at 5.0% for the rest of the aforementioned period. These numbers represent the so-called "baseline scenario" that the budgetary planning relies upon. For the purpose of budgetary planning the Kazakh government assumes an $80/bbl oil price to hold over the entire 2024-2028 period. This level is roughly equal to the average Brent price in 8M23. As one can derive from the published numbers, the government expects the tenge to remain stable at $KZT 460 throughout the entire period, and this assumption doesn’t appear obvious. Hence there are a number of questions about the forecast and budgetary figures.
Overall, it looks as though the government is going back to the strategy of saving money in the National Fund rather than spending its incoming annual revenues, as was the case in 2022. Going forward, the government intends to keep the consolidated budget in surplus (having a 0.4% of GDP deficit in 2023). Another conclusion is that the fund’s assets are high enough to secure financial stability in case of unexpected external shocks. What still remains unclear is the stability of the nominal tenge desired by the government.
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