Kazakhstan’s President Nursultan Nazarbaev reported in mid-December that 2000 GDP would grow 9 percent (Russian agencies, December 13) while the IMF has projected an 8 percent rate (Bloomberg, December 19). Whatever the figure, it is clear that the country grew at its fastest rate since the Soviet breakup. The 2000 growth followed a small (2 percent) increase in output in 1999 (after the Russian financial crisis) and a 2 percent output decline in 1998.
Higher oil prices and growing commodity production were major reasons for Kazakhstan’s booming growth in 2000. Kazakhstan extracted 35.2 million metric tons of oil and gas condensate in 2000, a 17 percent increase from 1999 (Russian agencies, January 5). Other commodities, such as iron ore production, accelerated even faster (up 76 percent in the first eleven months of 2000). These trends boosted growth in industrial output to nearly 15 percent during the first eleven months of the year. Aside from the mining industry, industrial processing is growing quickly as well (up 16.6 percent) reflecting a broader recovery in noncommodity branches, albeit from a low base.
Most commodity production is being exported, as was apparent in a 73 percent jump in exports during the first ten months of 2000. Imports were up 34 percent, due largely to fuel imports from other CIS countries, and to the need to import industrial inputs for expanding production. Still, the trade surplus nearly tripled to US$3.3 billion during this time (Russian agencies, December 24). While the economy accelerated in 2000, the tenge remained stable. This helped to push end-year inflation below 10 percent by December 2000, compared to 18 percent a year earlier. Tight monetary and fiscal policies together with the diminishing effects of the tenge devaluation in 1999 also reduced inflation.
While these and other favorable trends are likely to carry over into 2001, Kazakhstan’s economy is unlikely continue to grow so rapidly this year. Commodity prices–on which the economy is highly dependent–are likely to drop this year, despite OPEC production cuts and continued growth in Russia. The slower growth that is anticipated in Russia this year will further slow exports and industrial output. Still, Kazakhstan’s economic picture is brighter than it has been in years.
STRONG GROWTH HELPS KAZAKH FINANCES.