DIVERGENT VIEWS ON KAZAKHSTAN’S ECONOMIC PERFORMANCE.

Publication: Monitor Volume: 4 Issue: 10

President Nursultan Nazarbaev gave an upbeat account of his country’s economic performance last week, telling a meeting at Kazakhstan State University that GDP grew 2.5 percent in 1997 compared to that of the year before. This, he said, gave Kazakhstanis the highest per capita GDP rating ($1,500) of any country in the CIS. Annual inflation at the close of the year had settled at the lower than expected rate of 12 percent, he said, while the average monthly wage had risen 27 percent to $120. (Russian agencies, January 12; Kazkommerts Securities, January 12) Nazarbaev’s optimism was buttressed by the State Investment Committee, which reported that foreign direct investment in 1997 totaled a healthy $1.7 billion — the highest of all CIS countries for the second consecutive year. The metallurgical sector continues to outrank the oil and gas sector as a recipient of foreign investment.(Statistical Outlook for Kazakhstan, No. 1, 1997, p.21)

Nazarbaev’s glowing account differs markedly in tone from a report recently published by the Almaty-based Institute of Development of Kazakhstan. The Institute points out that GDP and wages in 1997, while indeed over the 1996 figures, were still some 35 percent lower than in 1991. Officially, unemployment is relatively low at 5.6 percent, but the authors of the report claim that the real unemployment rate is closer to 20 percent, and that 40 percent of those unemployed are rural youths aged between 16 and 29. Due to poor health and environmental factors, male and female life expectancy has fallen by nearly five years since independence. With the added out-migration of non-Kazakhs, the Republic’s population dropped from a high of 16.9 million in 1994 to 15.8 million last year, making it the only Central Asian state reporting an absolute decline in the size of its population since independence. The authors warn that, unless the government takes urgent measures to improve living standards and create employment, the country could face even more serious problems in the next century. (Delovaya nedelya, December 26, 1997)

These different evaluations recall the old adage, "Is the glass half empty or half full?" Kazakhstan has undoubtedly made great strides in transforming its economy since the introduction of its own currency in November 1993. After all, even if real output and wages were higher in 1991, the two indices then meant little, since output was not demand-driven. By 1996, prices for almost all goods had been freed, and a reformed National Bank of Kazakhstan had successfully asserted control of monetary policy, interest rates, and inflation. The oil and gas agreements on the Caspian Sea and Karachaganak gas condensate field signed last November in Washington should give an impetus to growth and help sustain it over the long term. However, few foresaw the magnitude of the social costs accompanying stabilization. According to the International Federation of the Red Cross, 73 percent of Kazakhstanis live below the government-defined monthly individual poverty line of $50 (Reuter, November 12, 1997), and electricity cuts and wage arrears continue to plague the average citizen.

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