First and foremost, Suleymenov addressed the overall economic situation in the world.
“The global economy continues to develop this year under the influence of geopolitical instability. We are witnessing high volatility in the markets, changes in trade relations, and a redistribution of capital as a consequence of a range of military conflicts. This affects the overall economic dynamics. I would like to highlight the risk of a potential decrease in oil prices, which is an important factor for our country's economy,” he noted.
Nevertheless, according to him, the current economic situation in Kazakhstan shows a positive GDP growth trend. Over the first nine months of this year, it has increased to 4.0% due to growth in all sectors of the economy.
“Inflation has decreased by more than 2.5 times compared to the peak values of February 2023. However, this figure is still far from the National Bank's target of 5%.
I would like to specifically mention that after a prolonged slowdown, inflation accelerated to 8.5% in October of this year. The main contribution to inflation acceleration comes from the inflation of paid services – 14.3%, against the backdrop of the implemented 'Tariff for Investment' program and rising costs of several market services. The price increase for non-food goods has also accelerated – 7.8%, in light of rising production costs and import prices. At the same time, the disinflation of food products is exerting a restraining influence on inflation – 4.9%.
Overall, the price dynamics this year align with our forecast. This is the result of moderately tight monetary conditions and anti-inflationary measures taken by the Government. By the end of 2024, we expect inflation to be in the range of 8-9%,” Suleymenov reported.
He noted significant risks in the forecast, both in the external sector and within the economy. Among the internal pro-inflationary factors, he particularly highlighted the revision of transfer volumes from the National Fund.
“It is important to note that the budget heavily relies on transfers from the National Fund. As a result, the non-oil deficit remains high. I would like to remind you that this is a crucial metric for the balance of public finances in Kazakhstan.
This year, the volume of direct transfers from the National Fund will amount to 5.6 trillion tenge, while the total withdrawals will exceed 6 trillion tenge. Consequently, the balance of receipts and withdrawals from the National Fund remains negative – withdrawals exceed receipts,” the head of the National Bank added.
He is confident that this serious pro-inflationary factor prevents us from easing monetary policy more rapidly, lowering the base rate, and consequently the interest rates on bank loans, including for businesses.
“In this regard, we believe it is extremely important to use the new Tax Code as a tool for implementing systemic measures to increase non-oil revenues of the republican budget and balance the state budget,” Suleymenov remarked.
In conclusion, he noted that inflation affects the purchasing power of the population and the stability of the economy. Unstable and high inflation leads to the depreciation of savings and labor income of citizens, prompting a shift towards foreign assets.
“For businesses, this creates difficulties in long-term planning, reduces incentives for investment, and slows down economic growth rates. Therefore, combating inflation and stabilizing it remain key priorities of economic policy.
By the directive of the Head of State, close cooperation with the Government will continue to ensure the coordination of our actions. The National Bank intends to make balanced and well-founded decisions to achieve the target inflation level of 5%,” concluded the head of the National Bank.