GDP down 2.2 percent year-on-year; government still hopes for growth in 2009

business and economy

GDP down 2.2 percent year-on-year; government still hopes for growth in 2009

By SRI ⋅ November 17, 2009 ⋅

(SRI) - Kazakhstan’s GDP shrank 2.2 percent year-on-year in the first nine months of 2009, according to the State Statistics Agency. Its foreign trade surplus meanwhile fell almost 70 percent to $8.8 billion from $28.1 billion in January through September 2008.

While many independent economists, including those at the International Monetary Fund (IMF) and the European Bank for Reconstruction and Development (EBRD), predict that Kazakhstan’s economy will shrink for the first time in a decade, government officials stuck by a forecast for growth in the year as a whole.

"We think that the Ministry of Economy’s outlook of 0.1 percent [growth] is achievable and this indicator may be even higher," the State Statistics Agency chairman Alikhan Smailov told reporters on Monday.

The IMF, echoed by independent analysts, said Kazakhstan first needs to solve problems in the banking sector to facilitate recovery. BTA Bank and Alliance Bank, two of the country’s largest banks, are currently undergoing the restructuring of their debts, a process that weighs heavily on the entire sector.

Macroeconomic indicators suggest that Kazakhstan is on its way to recovery, as prices of oil, the country’s chief export commodity, rebounded. Grigoriy Marchenko, the chairman of the National Bank of Kazakhstan said last week that the central bank would widen the trading corridor for the Kazakh tenge to allow the currency to appreciate .

Most recent economic data, however, still paint a mixed picture. While the agricultural sector grew by 1.7 percent in January-September year-on-year, the industrial sector fell by 0.4 percent, construction was down 8.9 percent and financial services contracted by 5.7 percent.

Inflation has been contained and amounted to 5.1 percent in January - October 2009.