Last year, The Economist called 2024 the "year of elections." Indeed, this year 88 countries – home to at least 49% of the world's population – have already had or are expected to hold nationwide elections.
For example, in Ukraine, the elections scheduled for March did not take place due to the imposed martial law. At the same time, March presidential elections in Russia resulted in the re-election of Putin. Meanwhile, on another continent, the focus is on the US presidential elections, which are set to take place on November 5, 2024. It will be the 60th American elections, where the 47th president of America will be elected.
It might seem that presidential elections are purely political events. However, practice shows that this event significantly impacts the global economic situation. For example, in its regular Fiscal Monitor review in April of this year, the IMF identified presidential elections in countries as one of the factors contributing to rising budget deficits. "Empirical evidence shows that fiscal policy tends to be looser, and slippages larger, during election years, reflecting a “political budget cycle”. Estimates show that deficit outturns in election years are higher than deficit outturns in other years by 0.3 percentage point of GDP on average," writes the IMF.
Despite the absence of elections, the issue of budget deficits and increasing fiscal expansion is on Kazakhstan's agenda. This topic is the focus of the current review. In the first six months of this year, Kazakhstan economy faced significant shortfalls in tax revenues for the republican budget: tax revenues for January-June 2024 are 14% lower than in the same period in 2023 and 24.1% below the plan. Forced to finance the consequences of floods amid declining tax revenues, Kazakhstan’s government withdrew 3.0 trillion tenge from the National Fund, which is already 3/4 of the planned guaranteed transfers for the year, borrowed almost 2.5 trillion tenge, and sold shares of JSC "Kazatomprom" to the National Fund.
However, despite budget imbalances, the growth prospects for both Kazakhstan and global economies are still seen as positive by economists. For example, in July, the IMF maintained its forecast for global economic growth in 2024 at 3.2% and improved its growth forecast for Kazakhstan for this year from 3.1% to 3.5%. According to the June Global Economic Prospects report, the World Bank forecasts global economic growth in 2024 at 2.6% YoY and Kazakhstan economic growth at 3.4% YoY.
In the current review AERC, compared to the April review, has lowered the economic growth forecast for Kazakhstan in 2024, taking into account the slowdown in growth rates in several economic sectors and the decline in fixed capital investments in the first half of 2024. According to the aggregate demand model, GDP growth is forecasted at 4% (previously 4.2%), and according to the aggregate supply model, at 3.9% (previously 4.2%). The consensus forecast for economic growth in 2024, is 4.0% YoY. AERC is lowering its economic growth forecast for 2024 for the second consecutive review.
AERC improved its forecast for the average annual inflation rate for 2024 to 8.4% (in April it was 9.1% YoY). The complex situation with tax revenue collection has led to a worsening of AERC's budget deficit forecast: a deficit of
(-)5.1% of GDP is expected (in April it was (-)4.7% of GDP). Simultaneously, AERC expects a current account deficit in the balance of payments in 2024 at (-)6.1% of GDP (it was (-)6.5% of GDP in April).
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