The report also examines the effect of the pandemic on poverty and education.
NUR-SULTAN, 22 July 2020 – For the first time since the 1990s, Kazakhstan’s economy is expected to contract by 3% in 2020 with a moderate recovery of 2.5% in 2021, according to Kazakhstan’s latest economic update from the World Bank (Summer 2020) – Navigating the Crisis Report.
Although Kazakhstan’s GDP grew by 2.3% in the first quarter, economic activity weakened in the following months as raw material costs fell, industry declined and prevention measures opposed to COVID-19 slowed economic activity. Consumer demand grew 1.2%, reflecting the development of COVID-19 considerations and restriction measures. Investment is expected to decline to 1.0% consistent with the year, basically supported by ongoing foreign direct investment in the oil and fuel industry and residential construction. Disruptions in supply and currency depreciation boosted above-rising inflation in line with SNB’s target range constraint.
“The government acted early to involve the COVID-19 pandemic, and accumulated budget reserves allow the government to introduce an aid program to mitigate the effects of COVID-19 on the economy,” said Sjamsu Rahardja, senior economist at the World Bank. Kazakhstan. “Weak demand and oil prices, as well as the extended pandemic, reveal significant dangers to the economic landscape. The government will likely use resources to assist the poor and vulnerable, protect productive assets, and introduce reforms to help recovery. »
A protracted crisis will most likely contribute to increasing poverty and inequality in Kazakhstan. Preliminary estimates recommend that the poverty rate simply rise in 2020 from 8.3 consistent with a penny to 12.7 consistent with a penny, equivalent to more than 800,000 more people living in poverty. The labour market surprise in Kazakhstan due to the pandemic and mitigation measures is expected to have a serious effect on employment, i.e. in sectors employing low-skilled workers.
The report also argues that COVID-19 has a negative effect on the progression of human capital in Kazakhstan. Unequal access to quality education, especially during containment, can have a negative effect on the progression of human capital for the poor. School closures can result in loss of learning for more than one-third of the school year and have an effect can mean a decrease in International Student Assessment Program (PISA) problems. Since the maximum number of academics in the country is lately around the functional literacy threshold and assuming that some will lose more than others, estimates recommend that the percentage of academics with poor functionality accumulate through 3 percentage points (64 to 67%).
“The effect of COVID-19 on schooling and learning losses will have a decades-long effect on the economy of around 2.9%, which equates to an overall economic loss of up to $1.9 billion consistent with the year,” says Jean-Fran.ois Marteau, global director of banks in Kazakhstan. “It would be vital to focus on achieving better access to quality education, by adding distance education, to avoid a deterioration in the quality of human capital, i.e. among Kazakhstan’s low-income population.”
The report concludes that, under the threat of a prolonged collapse of the global oil market, Kazakhstan’s path to a resilient recovery can simply strengthen the power of management and public services, adding the use of electronic platforms to provide key public services, greater tax management, and a mechanism for reviewing and reallocating tax resources to broader state programs. Renewed reform in the logistics, virtual telecommunications and finance sectors can help the entire personal sector explore new opportunities.
The online discussion of the new report with local experts was an opportunity to exchange perspectives on the country’s functionality and economic forecasts for the future.
The World Bank Economic Update is a six-monthly series designed to track socio-economic progress in Kazakhstan and can be obtained online at www.worldbank.org/en/country/kazakhstan/publication/economic-update-summer-2020.