Kazakhstan’s Economy to Keep Rebounding, IMF Predicts

June 02. The Astana Times

By Dinara Yussupova

Kazakhstan’s Economy to Keep Rebounding, IMF PredictsKazakhstan’s economy is gaining momentum and its currency reserves increasing because of favourable commodity prices and sound government policy, according to the International Monetary Fund.

The report, which the IMF’s Kazakhstan mission director Ana Lucia Coronel unveiled, said the country’s gross domestic product is expected to increase 6.5 percent this year, on par with last year’s 7 percent.

Oil, minerals and services related to them will remain the principal drivers of growth, according to the report, entitled “Prospects for Economic Development: Caucasus and Central Asia/Kazakhstan”.

Other sparkplugs will be agriculture, which is expected to recover from last year’s drought, and retailing, which will benefit from rising incomes, the report said.

Kazakhstan’s current account, which reflects revenue flowing into the country minus revenue going out, is expected to increase because of an increase in exports and income from other international transactions.

The significant inflow in foreign currency that’s expected will further increase Kazakhstan’s international reserves and the National Oil Fund’s assets, the report said. Together, international reserves and the oil fund total a hefty US$ 70 billion.

A global economic rebound has helped fuel the jumps in commodities prices that have benefited Kazakhstan, the report said.

Growing demand at home and abroad also has fueled industrial production in the country.

The value of Kazakhstan’s two-way trade surged 24.3 percent to US$ 89 billion last year, compared with 2009, according to the Statistics Agency of Kazakhstan The value of exports soared 37.1 percent to more than $59 billion. Imports rose 4.5 percent to US$ 30 billion.

Tatiana Zhdanova, the vice president of Kazakhstan’s Industrial-Commercial Chamber, said last year’s trends in both trade and manufacturing are holding up this year.

“There are 166 countries worldwide which are trading partners of our country,” she said. Former Soviet countries accounted for a quarter of Kazakhstan’s two-way trade in 2010, she said, while European countries accounted for about 49 percent.

Russia and China were Kazakhstan’s largest trade partners last year, each accounting for more than 17 percent of the total. In the third place was Italy with 13.7 percent, followed by France, the Netherlands, Germany, Austria, Canada, the United States, the United Kingdom, Ukraine, Turkey and Uzbekistan.

Oil and gas products and metals accounted for almost 84 percent of the value of Kazakhstan’s exports last year. Agricultural and chemical products were the next most important categories.

Kazakhstan is third in grain production among former Soviet countries, after Russia and Ukraine, Zhdanova noted.

A noteworthy development in agricultural trade during 2010, she said, was Kazakhstan’s resumption of grain supplies to Egypt.

Kazakhstan farmers are also continuing to develop the sizable Iranian market, with five million tones of exports last year.

When the Ozen-Gurgan railroad that will connect Kazakhstan, Turkmenistan and Iran is completed in 2012, “I think this direction (Iran) will be given a new impetus,” Zhdanova said.

Both domestic and foreign experts say Kazakhstan’s effort to increase agricultural and manufacturing production, to modernise its industries, and to add transportation and logistics capabilities will boost trade.

  2006 2007 2008 2009 2010
Trade turnover 61.93 80.51 109.07 71.60 88.98
Percentage increase over previous year 37 30 35.4 34 24.3
Value of exports 38.25 47.76 71.18 43.20 59.22
Percentage increase over previous year 37.3 28.4 49.0 39 37.1
Value of imports 23.68 32.76 37.89 28.41 29.76
Percentage increase over previous year 36.4 38.4 15.6 25 4.8
Trade balance 14.57 15.00 33.29 14.79 29.46