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Kazakhstan’s central bank has raised interest rates to their six-year point in a bid to stem runaway inflation, triggered in part by an influx of Russians fleeing the mobilization.
The news highlighted the economic headwinds rocking Kazakhstan due to Russia’s war in Ukraine. The recession calls for President Kassym-Jomart Tokayev’s promises to revamp the oligarchic economy before next month’s presidential election.
On October 26, the National Bank of Kazakhstan raised the base rate from 14. 5% to 16%, a larger accumulation than analysts expected, putting loan prices at their point since 2016.
Inflation stood at 19. 7 year-on-year, after beating forecasts by a “fairly significant” degree in September, the bank said. It expects to reduce inflation to 7. 5-9. 5% next year.
War-related points have been the main drivers of inflation, from chain disruptions that raised producer prices to a “migration shock” that raised prices for customers, the bank said.
“Russians fleeing Putin’s war are stoking the pain of inflation for their neighbors,” headlines the Bloomberg report on Kazakhstan’s rate hike.
The clearest visual signal is the increase in housing rents. But affluence also increases demand for all kinds of goods and facilities and raises prices.
The effects of the “migration shock” would be short-lived, the central bank said, but “created dangers of side effects in the form of a direct influence on inflation expectations. “
Lower production in the face of the gloomy outlook.
GDP grew by 2. 8% in the first 3 quarters of 2022, to 3. 3% from January to July.
The rate hike will further suppress business activity by making loans more expensive, said Galymzhan Pirmatov, president of the National Bank.
Poverty, low living standards and socio-economic injustice were the points that led tens of thousands of protesters in January to what became fatal civil unrest.
Tokayev’s promises since then to reform the economy to make it fairer and eliminate crony capitalism are stronger now that Kazakhstan heads toward an early presidential election next month, though victory is assured.
But as his team struggles with the devastating economic effects of the Russian War, keeping promises becomes even more difficult.
For Eurasianet. org
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