EXPERT INTERVIEW: Energy resources price falling prejudices forecast of Kazakhstan government on GDP growth in 2008

/IRBIS, Vitaliy Tomskiy, August 13, 2008/ - According to last week data of Ministry of Economy and Budget Planning the rates of growth of Kazakhstan acute GDP in initial 6 months of 2008 decreased to 5.1 % compared to the same period of last year. At that, government forecast economy recession this year to 5.3 % compared to 8.7 % in 2007. At the same time, on considerable energy resources price falling (oil barrel price decreased by 23 % in a month), government forecast of GDP growth arouses more and more doubts. Forecasts of interviewed experts by IAFM IRBIS on GDP level I 2008 are divided, however in the part of recession reasons, they coincide. Danay Sarypbekov, analyst of Citibank Kazakhstan JSC sees the main reason of recession in decreasing of borrowing rates on international financial markets and followed decreasing of economy crediting. Mikhail Mejirzhanov, trader of Troika Dialog Kazakhstan JSC has the same viewpoint. "National economy is under bad conditions. We all note that on sharp raised inflation, consumption of people reduced significantly. We consider that every representative of middle class felt it. The second factor - is frozen constructions, which had been stopped since last year. The third factor - is reducing of crediting by banks of retail and corporate clients" - expert said. Shakhnazar Tleuliev, analyst of Asia Broker Services JSC thinks that government will soon review plans on GDP growth for 2008 in downward direction. "5.1 % growth, which was fixed in initial 6 months of 2008, is connected with high prices on fuel, especially oil, what was the reason of current positive balance. Moreover, China supported high oil prices. Production and economy growth in China after Olympic Games will slow down. Even now oil makes $114.25 per barrel". According to expert, there are no fundamental reasons for Kazakhstan economy growth in the second half of 2008. "In 2008 oil will likely to reduce, STB economy crediting will remain low, because they should pay last tranch on credits in 2008, and real estate market is falling". Anvar Deberdeev, expert of BTA analysis says that acute growth of Kazakhstan GDP for 2008 at 5.3 % is real. "Our forecasts are base on the fact that in June 2008 development of Kazakhstan economy was o high rates, than that of the previous months. Though price boom on energy recourses and other primary goods was stopped; they are still on rather high level. Last weeks oil decreasing can positively redound on inflation decreasing, growth of payable ability of population and enterprises, what in its turn may push up development of non-primary economy sector". Nurlan Rakhimbaev, the head of branch analytics department of Subsidiary organization of Joint Stock Company BTA Bank BTA Securities JSC agrees with him. "Government forecasts are real. Export growth, mostly at the expense of high oil and metal prices, will give the necessary increasing of face GDP. Stable level of STB crediting of acute sector and budget programs for support of construction sector will contribute to economy growth. Stability of national currency, supported by National Bank will also have positive effect on economy growth" - expert says. However, Danay Sarypbekov, analyst of Citibank Kazakhstan JSC considers that government policy in this situation may be considered as flaccid. "Help comes very slow. Kazakhstan economy will continue recession without government's firm measures, even if exported commodities` prices will remain high". "There are many mechanisms of economy support, such as through increasing government expenditures within the budget, new investment projects, especially on infrastructural objects in non-primary sector, which will also may support badly damaged construction sector. For these aims government has National Fund with stabilization portfolio, which was supposed to use for economy support in crunches". Acute GDP growth forecast in 2008: BTA Bank JSC - 5.3 % SO BTA Bank JSC BTA Securities JSC - 5.0 % Asia Broker Services JSC - 4.5 - 4.7 % Troika Dialog Kazakhstan JSC - 3.0 %. REFERENS Forecast of macroeconomic indicators of Kazakhstan republic for 2008 2010 of Ministry of Economy and Budget Planning ---------------------------------------------------------------------------- Forecast 2007 2008 -------- -------- 2010 in % Name report estimation 2009 2010 to 2007 ----------------------- -------- ---------- -------- -------- --------- Gross domestic product, 12,763.2 15,640.6 17,743.8 20,737.6 KZT bn. Acute change in % 108.7 105.3 106.0 105.6 117.9 to previous year GDP per capita, $ 6,727.7 8,199.0 9,036.0 10,387.0 154.4 ---------------------------------------------------------------------------- Index of physical volume of main macroeconomic indicators in January - June 2008 in % to corresponding period of last year ---------------------------------------------------------- Name Unit weight, % ------------------------------------------ -------------- Industry 22.8 Construction 18.5 Trade, repair of car, household appliances and personal belongings 5.3 Transport and communication 6.9 ---------------------------------------------------------- Information is presented within the frames of weekly expert interview on acute questions of Kazakhstan and international stock market development, made by IAFM IRBIS. Analysts of Asia Broker Service JSC, Citibank Kazakhstan JSC, Troika Dialog Kazakhstan JSC, Subsidiary organization of joint stock company BTA Bank BTA Securities JSC and BTA Bank JSC participated in interview. IAFM IRBIS expresses its gratitude for participation in this project. For detailed information please contact us Tel.: (727) 237 53 41 [2008-08-13]