What is happening in the world is influencing the state of minds of both ordinary people and politicians more than usual, thereby overturning the established geopolitical and moral dichotomy of everyone about what is not allowed and what is possible. Russia’s attack on Ukrainian territory provoked a “break” in this dichotomy and the established status quo. Tensions in the Middle East are becoming a new arena for the refraction of strategic interests between developed countries and the so-called “rogue countries”. Iran's missile and drone attack on Israeli territory did not produce a significant result, but showed the backwardness of Iran's level of technical development, as well as its lack of support from Muslim states. In addition to developed countries, the coalition of Israel, the United States and Great Britain has been joined by the monarchies of the Persian Gulf, which marks Iran out as a rogue country.
A dissonance with the geopolitical situation is the confident growth of the global economy, with developed countries acting as drivers, although their growth rates, by definition, do not reach the levels of developing countries. The global economy avoided the risks of recession, was able to reduce inflation and make a “soft landing”, as defined by the IMF. In its April review, the IMF forecasts global economic growth for 2024–2025. at 3.2%, marking the slowest growth rate by historical standards.
In Kazakhstan, the beginning of spring is accompanied by large-scale floods, which became the theme of the cover of our IOC. This is the first time the country has encountered such a large-scale tragedy since independence. Damage caused by floods could become a significant constraint on the growth of the Kazakhstani economy in the short term (for more details, see the section “Details: Floods and their prevention measures”). The full amount of the loss has not yet been calculated, but it is already clear that the state is faced with the need for significant capital investments to restore infrastructure. The allocation of additional funds faces difficulties due to under-fulfillment of the revenue side of the republican budget. The permanent excess of the growth rate of costs over revenues discredits the Government’s thesis about the focus of budget policy on consolidating costs.
In the economy of Kazakhstan in the 1st quarter. By 2024, there will be a slowdown in the growth of the real sector and an acceleration of the service sector. At the same time, investments in fixed assets fell, as well as the volume of freight turnover for all types of transport. Inflation in annual terms has been on a downward trend since the beginning of 2024, and in March 2024 amounted to 9.1% (y/y). However, price liberalization since last year is still affecting the rise in prices for paid services. Pro-inflationary risks remain.
In the current AERC review, compared to the January release, the IOC slightly lowered Kazakhstan’s economic growth forecast for 2024 due to full-scale floods in almost all regions of the country, as well as a voluntary reduction in oil production under the OPEC+ agreement. According to the aggregate demand model, GDP growth is projected at 4.2% (previously - 4.6%), according to the aggregate supply model, the estimate also worsened from 4.5% to 4.2%.
The AERC also downgraded its average annual inflation forecast for 2024 to 9.1% (8.8% in the January IOC). AERC improved the estimate of the fiscal balance to GDP to (-)4.7% of GDP ((-)5.5% of GDP previously) due to revaluation due to the release of actual data for 2023, as well as due to a revision of the premise for the transfer from the National fund. Despite the moderate growth in exports due to the upward dynamics of the oil market, imports of goods and services will generally exceed exports, against which AERC expects a deterioration in the current account of the balance of payments (-)6.5% of GDP ((-)5.2% of GDP GDP in the previous review).
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