Monday, December 9, 2019

Kazakhstan maintains rate, inflation seen in range in 2020

     Kazakhstan's central bank left its base rate unchanged at 9.25 percent, saying the current monetary conditions are considered sightly restrictive due to the need for measures to limit the impact on inflation and exchange rate expectations from a widening current account deficit.
     The National Bank of Kazakhstan (NBK), which raised its rate in September by 25 basis points and thus unwound a rate cut in April, added expanding consumer demand and accelerating economic growth remain the main pro-inflationary factors but the current base rate should keep inflation within the target corridor fo 4-6 percent this year and in 2020.
     Kazakhstan's inflation rate eased to 5.4 percent in November from 5.5 percent, with food prices still the main contributor to inflation, hitting a 2019-high of 9.7 percent in October.
     Inflationary expectations among the population also rose slightly to 5.8 percent in November from 5.6 percent, with 54.7 percent of those surveyed expecting inflation of the same growth rate over the next 12 months or a slowdown in price growth.
      Inflation by the end of this year is forecast in the range of 5.5-5.7 percent, with inflation decelerating to 5.0-5.5 percent by the end of 2020, with the main factors driving inflation still the fiscal stimulus and the positive output gap.
     During the first quarter of next year NBK said inflation could approach the upper level of its target due to an increase in regulated tariffs and prices for some food items.
     Kazakhstan's economy expanded by 4.3 percent in the first 9 months of the year, up from a rate of 4.1 percent in the first 8 months, with investments growing 8.2 percent and real wage growth rising to 12 percent in the third quarter.
      NBK estimated 2019 growth of 4.2 percent and 3.8 percent in 2020, with the main factors still rising consumer demand from high incomes, higher investment demand due to infrastructure projects and other investment projects, and higher exports of oil and gas sector products.
     The Kazakstani tenge has appreciated since mid-October, partly reversing a steady decline since March 2018, and was trading at 385.9 to the U.S. dollar today, still down 2.6 percent this year.



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