Kazakhstan is resilient to Russia's economic slowdown - Renaissance Capital

Business Materials 29 April 2022 12:24
Kazakhstan is resilient to Russia's economic slowdown - Renaissance Capital

BAKU, Azerbaijan, April 29. Kazakhstan is far from being the most sensitive country in the region to a slowdown in economic activity in Russia, Sophia Donets and Andrei Melashchenko, economic analysts for Russia and the CIS at the Renaissance Capital investment company, told Trend.

According to Donets and Melashchenko, Tajikistan, Uzbekistan and Georgia are much more sensitive to the slowdown in Russia.

"Exports, remittances and direct investment from Russia account for nearly four percent of Kazakhstan's GDP. Nevertheless, the economies of the countries which are in the trade union are traditionally connected," the analysts noted.

"We expect Kazakhstan's GDP growth to slow down to 3-4 percent (previously - 5.3 percent) this year, despite the favorable situation in the oil market and the projected growth in production," they further said.

The experts also noted that any separate sanctions are unlikely to be imposed on Kazakhstan (including on energy resources transported through Russia).

"According to Kazakhstan’s presidential administration, the country will comply with the sanctions imposed by the international community against Russia," Donets and Melaschenko said. "Kazakhstan may benefit from the measures of capital control in Russia and the ban on investment in this country by a number of developed economies in the long term."

The analysts also said that the government and the National Bank of Kazakhstan have already taken a number of measures aimed at minimizing the negative consequences of the recession in Russia.

"The Kazakh government has significantly increased state budget spending for this year to support household incomes and ensure food security, maintaining the deficit at nearly the previously expected level due to a growth in transfers from the National Fund and in export duties," the analysts said.

The National Bank of Kazakhstan is tightening its monetary policy and conducting interventions in the foreign exchange market (about $1.3 billion since the end of February) to support the national currency and reduce the negative impact on inflation from the weakening of the Kazakh tenge and the Russian ruble, concluded the analysts.