Kazakhstan eyes 2.8% GDP growth on strong oil prices

Country optimistic of faring better than government’s initial forecast

Higher-than-expected oil prices may push Kazakhstan’s gross domestic product growth to 2.8 per cent this year, above the recently updated official forecast of 2.5 per cent, economy minister Timur Suleimenov told Reuters in an interview.

The resource-rich central Asian nation would see economic growth above the government’s initial forecast, if the Brent crude oil benchmark averages $55 a barrel or more this year, Suleimenov said.

“The main drivers [of growth] are the basic industries... oil and gas, obviously and the rising prices of metals,” he said on Tuesday.

“Under an optimistic scenario, with oil price at $55 or more, we may see GDP growth of up to 2.8 per cent.”

Kazakhstan last month revised its state budget, raising the expected average Brent crude price to $50 a barrel from $35.

Kazakhstan plans to produce 81 million tonnes of crude oil and gas condensate this year, up from 78 million tonnes in 2016, despite joining an Opec-led output cut for the first half of this year.

Substantial reserves

Suleimenov said this would be possible because the cut had been agreed from November 2016 levels when Kazakhstan’s output was already high.

Kazakhstan set up the National Fund with excess oil revenues in 2000, and has since built up substantial reserves — peaking at $77 billion (Dh282.7 billion) in 2014. Now, it is using them to finance state spending on items such as infrastructure.