Country Report Kazakhstan February 2009

Outlook for 2009-10

• The president, Nursultan Nazarbayev, is expected to stay in power in 2009-10, having consolidated his hold on the country's political structures, but he could face growing dissatisfaction as economic growth slows.
• The role of the state in the economy is set to increase under the government's Action Plan for 2009-10 as the authorities attempt to combat liquidity problems in the banking sector and slowing GDP growth.
• With oil prices set to weaken sharply, the Economist Intelligence Unit expects real GDP growth to slow to below 1% in 2009. A pick-up in oil prices will result in a slight acceleration in growth in 2010, to 3.3%.
• Average annual consumer price inflation is expected to decelerate, from 17% in 2008 to around 6% in 2009-10, owing to much weaker global commodity prices and slower credit growth than in recent years.
• With economic growth slowing and export competitiveness coming under threat, there is a greater risk of sustained downward pressure on the tenge.
• High export revenue in 2008 is estimated to have put the current account into surplus for the year, but much weaker oil prices will push it back into deficit in 2009. The deficit will narrow in 2010, owing to a pick-up in oil prices.

Monthly review

• Kazakhstan joined the Organisation for Security and Co-operation in Europe (OSCE) "Troika" of past, current and future chairs on January 1st 2009 amid domestic controversy over recently enacted political reforms.
• The authorities have warned that the economic situation is likely to worsen in 2009, but have sought to reassure the public that social spending will bemaintained.
• Grigory Marchenko has been appointed governor of the National Bank of Kazakhstan (NBK, the central bank), possibly in preparation for a shift in exchange-rate policy to allow for a weaker tenge.
• The government has abolished a tax on crude oil exports with effect from late January 2009, apparently in response to weak oil prices. However, natural resource investors still have to pay rent tax and a mineral extraction tax.
• Preliminary data indicate that real GDP contracted year on year in October-December 2008. We estimate that full-year growth slowed from 8.5% in 2007 to 2.8% in 2008.
• Kazakhstan recorded a current-account surplus of US$3.7bn in July-September 2008, and is estimated to have posted a surplus of US$6bn (4.7% of GDP) in 2008 as a whole, compared with a deficit of US$7.3bn (7% of GDP) in 2007.

Source: Country Report

This report covers the following industry codes:
SIC Code: 80;47;82;49;48;1;60;10;59;15
NAICS Code: 62;48;61;22;517;11;52;212;44;23