Economic Analysis - Privatisation And Belt And Road Present Upside Risks For Long-Term Growth - OCT 2017

BMI View: While our core view is that Kazakhstan's post-oil crisis economic recovery will pick up steam over the coming quarters , we see two upside risks that could further boost the country ' s long-term macroeconomic outlook . Specifically , the government ' s privatisation programme and the Chinese ' Belt & Road' infrastructure investment initiative, both of which come as a tailwind for foreign direct investment and the diversification the country's economy.

We forecast Kazakhstan to grow by an above-consensus rate of 3.3% over the next five years, but we see growing upside risks to this view, which could take the average growth rate to around 5% over the forecast period. This upside risk to growth is driven primarily by two factors, namely, the government's ongoing privatisation programme and the Chinese Belt & Road infrastructure investment initiative. Both of these dynamics could significantly boost foreign direct investment and enhance the diversification of the economy, which is currently overly reliant on hydrocarbon exports (oil exports account for 25.0% of GDP). This is particularly important as we do not expect global oil prices to recover to pre-crisis levels and as such, the coming years could represent a make or break moment for the country's economic growth outlook.

Conditions Ripe For Privatisation And Diversification Takeoff

Commoditiy Price Uptick To Support Valuations
BMI Global Commodities Price Indices, 2010 = 100
f = BMI forecast. Source: BMI

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