Upturn in Kazakhstan's economy evident next year

"Our nation is facing a difficult time but we will overcome all these challenges. (In his State of the Nation address last November) Our President had expressed his confidence that we will come through this new global crisis even stronger.

"Thanks to our common will and strong traditions of unity, Kazakhstan will achieve new levels of development," said a spokesman at the embassy of the Republic of Kazakhstan, here.

Kazakhstan is the second biggest oil producer in the former Soviet Union, after Russia, and prevailing oil prices - which have slumped to US$38 to US$40 per barrel from the pre-2014 prices of US$100 and US$125 per barrel - have contributed to the downturn in its economy, which only expanded 1.2 per cent last year, against 4.1 per cent in 2014.

Analysts expect its economy to accelerate and expand 2.4 per cent in 2017.

STABILISE FINANCIAL SYSTEM

The embassy spokesman said in order to revive its economy, Kazakhstan has to, in the near future, implement a comprehensive anti-crisis plan and structural changes in five areas - financial sector, fiscal policy, privatisation, investment policy and social policy.

"Our most important task is to quickly stabilise the financial system and bring it in line with new global realities.

"First, we have to ensure efficient functioning of the financial sector under a floating exchange rate of the (Kazakh currency) tenge. Next, in the framework of inflation targeting, the National Bank (Kazakhstan's central bank) should reduce the level of inflation to four per cent in the medium term. For this, a mechanism of flexible interest rates should be used fully," he said.

According to a Bloomberg report last month, Kazakhstan switched to a free-floating exchange rate for its currency last August to counter the consequences of the collapse in crude oil prices. Annual inflation in the central Asian nation reportedly surged to 14.4 per cent in January this year.

Its government has noted that in the coming decade, Kazakhstan needs to strengthen its annual economic growth to five per cent; boost the value of its export of processed goods to US$30 billion a year; increase annual investments in the economy by more than US$10 billion and within 10 years, by at least US$100 billion; create more than 660,000 new jobs; and double labour productivity.

Such economic growth, said the spokesman, could only be achieved through the development of new drivers that ensure the inflow of export revenues.

FUTURE ECONOMY

"The new global reality is that only a diversified economy can effectively counter the consequences of the global crisis. Therefore, as our President said in his State of the Nation address, we are implementing an industrialisation programme and carrying out further reforms to improve our investment climate," he said.

Noting how important it was to start laying the foundations for its future economy, Kazakhstan was making an effort to increase its innovative potential, he said.

For the new economy to take shape, the nation has to develop expertise in smart technologies, artificial intelligence and future energy generation, design and engineering systems.

"This can be done only through the establishment of an efficient research and innovation system," said the spokesman.

He said privatisation was another area the government was looking at seriously as it has long recognised that its huge public sector, which supports over 7,000 enterprises, was responsible for "holding back economic growth and competitiveness, and even crowding out private investment and initiative".

"The President has instructed the government to develop a new privatisation programme, which will remove restrictions on the privatisation of public-sector enterprises, including national holdings such as Samruk Kazyna, Baiterek and KazAgro. After privatisation, the three holdings will be converted into compact organisations."

The spokesman added that a new social policy was also being developed as part of Kazakhstan's structural changes to revive its economy.

"The new social policy will prioritise extensive investment in human capital and focus on modernising the nation's education and healthcare systems," he said, adding that President Nazarbayev had also announced a free vocational education project, which would be implemented next year to improve the employment prospects of the nation's citizens.

 Source: BERNAMA