KAZAKHSTAN 2018 - 2021
|
GDP Growth (%) |
Potential Output Growth (%) |
Inflation (%) |
Unemployment (%) |
|
|
2018 |
4.1 | 3.8 | 6.1 | 4.8 |
|
2019 |
4.2 | 4.1 | 5.1 | 4.8 |
|
2020 |
2.8 | 4.1 | 3.2 | 4.7 |
|
2021 |
5.3 | 4.4 | 3.8 | 4.7 |
Table 1: Forecasts for Kazakhstan for 2018-2021
Figure 1: GDP Growth Accounting
According to preliminary forecasts, GDP growth rate will be 4.1% by the end of 2018. Major drivers of such dynamics are household consumption and oil exports. Household consumption in 2018 increases due to an increase in real disposable income of the population. The main factor in the growth of oil exports is the increase in oil prices in 2018 (71.6 dollars per barrel) relative to 2017 (56.3 dollars per barrel). The decline in imports also has a positive effect on GDP growth.
In 2019, economic growth rate is projected at 4.2%. Despite the fall in oil prices in 2019, the growth rate remains at the level of 2018. This trend is due to increased government spending. Namely, the government's initiative to implement social policy for 2019-2021. Thus, the contribution of government spending in 2019 will be 1.2%. According to the forecast, the fall in oil prices to 50 dollars per barrel will lead to a significant decrease in oil exports in 2019. Thus, oil exports in 2019 will fall by 7.2% compared to 2018. Household consumption will increase in 2019.
In accordance with the forecast, GDP growth in 2020 will slow to 2.8% despite an increase in household consumption growth rate and the implementation of social policy. The decline in oil exports will have a further negative impact on economic growth. The next factor slowing growth rate will be a fall in investments, which will be associated with an increase in real interest rates and an increase in the output gap in negative terms. Also, a slight effect on the growth rate of GDP will have a decline in the exports of non-oil goods and services due to a decrease in international trade.
In 2021, GDP growth rates are projected at 5.3%, mainly due to an increase in household consumption growth rate. Government consumption will also continue to have a positive effect on GDP growth. Further, investments will have a positive effect due to the increase in domestic demand and the decrease in real interest rates. The decline in oil exports will have a further negative effect on economic growth rate.
According to model predictions, inflation was at the level of 6.1% at the end of 2018 (according to the NBK, inflation is 5.3%). In accordance with the forecast, inflation for 2019 will be 5.1%. In connection with the slowdown in the economy, inflation for 2020 is projected at 3.2%. In 2021, a slight acceleration of inflation to 3.8% is expected.
During the forecast period, the real exchange rate of the tenge will weaken; the unemployment rate will remain relatively stable in the range of 4.7% - 4.8%; potential output growth will moderately increase in the following years, reaching 3.9% - 4.4%.
|
GDP Growth (%) |
Potential Output Growth (%) |
Inflation (%) |
Unemployment (%) |
||
| 2018 |
2.2 |
0.6 | 4.4 | 5.2 | |
| 2019 |
2.0 |
0.9 | 5.1 | 5.3 | |
| 2020 |
2.1 |
1.0 | 5.4 | 5.4 | |
| 2021 |
1.7 |
1.1 | 5.3 | 5.4 | |
Table 2: Forecasts for Russia for 2018-2021
Figure 2: GDP Growth Accounting
According to the model's forecast, Russia's GDP growth rate reached 2.2% in 2018, up from 1.5% in 2017. This is the fastest growth rate since 2012. All expenditure components of GDP, except for government consumption and export of non-oil goods and services, exhibited positive growth. A significant contribution to growth came from household consumption and investment. The former has increased due to a rise in real disposable income of the population, while the growth in investment was driven by a strong domestic demand. Meanwhile, the growth rate of imports continues to affect negatively the economic activity in 2018.
In 2019, economic growth is expected to decline to 2.0% as a result of the following factors. First, a forecast scenario considers downfall in oil price to $50 per barrel. Consequently, a negative contribution of oil exports (-0.7%) to GDP growth is anticipated in 2019. Second, the Russian government has increased the value added tax (VAT) rate from 18% to 20% since January 1, 2019. According to the model, this factor will lead to a slowdown in household consumption. At the same time, the rise in investment and non-oil exports will have a positive impact on the dynamics of economic growth.
In accordance with the forecast, GDP growth in 2020 will slightly increase to 2.1% despite the deceleration of household consumption growth rate and negative impact of net exports. A significant contribution to growth will come from investment. In 2021, GDP growth rate is expected to decline to 1.7%. The weakening of economic growth will be primarily associated with the negative impact of net exports and the continued slowdown of household consumption growth rate, which is the result of decreasing real disposable income of the population.
Inflation stood at 4.4% in 2018, settling above its target level (4%) due to continuing recovery of the economy and positive output gap. Based on the model’s forecast, the inflation rate will increase up to 5.1% in 2019. The acceleration of inflation will be mainly the result of stable economic growth and increase in VAT from 18% to 20%. Until the end of forecast period, the inflation rate is expected to remain above its target level, reaching approximately 5.4%.
During the forecast period (2018-2021), the real exchange rate of the Russian ruble is anticipated to strengthen mainly due to inflation acceleration. The unemployment rate is forecasted to remain relatively stable in the range of 5.2% – 5.4%; potential output growth will increase moderately, reaching 1.1% in 2021; the output gap will rise from 1% in 2018 to 3.9% in 2021.