Kazakhstan is set to accelerate its economic growth through a combination of Russian and Western investments, with the International Monetary Fund (IMF) predicting a 4.8% expansion by the end of 2023. The IMF expressed satisfaction with the outcomes of its mission's visit to the country, highlighting the country's resilient business activity amid global instability and a gradual decline in inflation.
In response to the IMF's recommendations for economic reforms, Kazakhstan, as articulated by its head of state, is actively embracing changes, already implementing some of the suggested measures. Notably, the country aims to position itself strategically between the West and the East, leveraging its advantageous middle ground rather than aligning definitively with either side.
The IMF's recent economic audit of Kazakhstan, with preliminary findings available on its website and a comprehensive report expected in February 2024, projects a 4.8% GDP growth for 2023, up from the initial estimate of 4.6%. While 2024 is anticipated to see a more moderate growth rate of 3-3.5%, contingent on the pace of structural economic reforms, the IMF acknowledges the potential for improvement in forecasts.
Commending Kazakhstan's economic policies, the IMF echoes key points from President Kassym-Jomart Tokayev's program speech in September, emphasizing a shift from reliance on mining industries to the development of the manufacturing sector. Proposed measures include enhancing the economy's appeal to major investors, supporting the government's plan for a new Tax Code (including a VAT rate increase, progressive income tax scale, and elimination of some tax benefits), and endorsing the country's monetary policy.
While the IMF acknowledges the competence of Kazakhstan's current monetary policy, including a reduction in inflation from 21% in February to 11% in September 2023, there is a notable change in leadership at the Central Bank. Despite this, experts anticipate a continued downward trend in inflation, reaching 7-8% by the end of 2024.
Beyond economic recommendations, the IMF underscores the importance of increasing transparency, openness of the economy, and reducing government influence in the market. These suggestions, though standard in such reviews, carry significant weight in the context of Kazakhstan's heightened geopolitical competition between the Russian Federation and Western countries.
President Tokayev emphasis on prioritizing national business interests in economic policies aligns with a global trend toward protectionist measures. As Kazakhstan navigates the delicate balance between the two sides, it reflects the government's current strategy, avoiding a definitive alignment while meeting its goals effectively.