Government • 16 October, 2018

GDP growth in January-September accelerated to 4.1% — Ministry of National Economy

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October 16 at the Government meeting chaired by the Prime Minister Bakytzhan Sagintayev, the results of the country's socio-economic development and the execution of the republican budget for the first nine months of 2018 were reviewed.

According to the Minister of National Economy Timur Suleimenov, in January-September 2018, the economy of Kazakhstan maintains a positive growth trend.

“GDP growth in the reporting period accelerated to 4.1%. This is higher than in eight months 2018 by 0.3 percentage points. The main contribution to the acceleration of growth from basic industries was made by trade and the recovery in the dynamics of the construction industry. Also, an impulse of economic activity was the reduction of inflationary pressure and an increase in investment demand,” Suleimenov reported.

The inflation rate remains within the corridor of 5-7%. In September, inflation was 0.4%, from the beginning of the year — 3.3%. At the same time, annual inflation is 6.1%.

According to the ministry, investment activity of enterprises remains at high levels. Investments in fixed assets increased by 21.6%. Investment in fixed assets in 12 regions showed an increase.

In the first nine months 2018, industrial production growth was 4.8%, exceeding the level of the previous month by 0.1 pp. At the same time, the target indicator for the year was 3.3%. In manufacturing, the increase was 5.1%, which corresponds to the target indicator. The achievement was the result of an increase in production of non-ferrous metals by 4.5%, refined products — by 7.5%, the chemical industry — by 8.2%, paper and paper products — by 9.2%, furniture — by 5.1%, also output in mechanical engineering — by 14.5%.

The growth rate in the mining industry was 4.9%. Compared with the figures for January-August, the increase in the production of coal, lignite and oil is traced.

“In the construction industry, an increase of 4.4% was recorded. The acceleration of growth is associated with an increase in the construction of residential buildings, industrial facilities, main storm sewers, the reconstruction of highways, and the modernization of oil refineries,” Suleimenov said.

In addition, moderate growth is observed in the production of services by 3.9%. The main contribution was made by trade. Active recovery growth in trade stimulates business activity. Today, in accordance with established schedules, the shipment of oil and metals, the sale of grain, equipment, pharmaceutical and other products are provided.

The foreign trade turnover keeps the trend of steady growth: for eight months, the growth was 21.6%. At the same time, exports increased by 28.2%, imports — by 10.8%.

There is a steady trend in the labor market. Since the early 2018, nearly 414,500 people have been employed (as of October 1). Wages are growing at a moderate pace. In January=September, the average monthly salary amounted to 158,200 tenge and grew in real terms by 1.9%. Real money incomes against the background of growth in real wages and a slowdown in inflation in January-August increased by 3.5%.

“Thanks to the 6% growth of the economy in September, it became possible to achieve at the end of the year GDP growth of 4+. For this, it is necessary to ensure the development of the economy not lower than 3.9% in the fourth quarter,” said Suleimenov.

The Chairman of the National Bank Daniyar Akishev reported that since the beginning of the year inflation had reached 3.3%. This is lower than the same period 2017. Inflation in annual terms amounted to 6.1% against 7.1% in September 2017. According to the National Bank's forecast, inflation in 2018 will remain in the corridor of 5-7%.

According to the chairman of the National Bank, it is necessary to take measures to maintain inflation in the target corridor of 2019 to increase inflation controllability. Also Akishev announced the decision of the National Bank to increase the base rate from 9% to 9.25%.

“The National Bank yesterday decided to raise the base rate from 9% to 9.25%. The new level of the base rate will allow increasing the demand for tenge assets and maintaining acceptable monetary conditions,” said Akishev.

However, at the end of September, the growth of deposits in national currency amounted to 4.1%, or 380 billion tenge. Deposits in foreign currency decreased by 2.5% or 210 billion tenge. As a result, the dollarization of deposits fell to 46%.

Minister of Finance Alikhan Smailov reported that in the first nine months of 2018, there was an increase in state budget revenues (without transfers) with a growth rate twice as high as in the same period of 2017. Expenses were executed by 0.2 pp higher than the year backwards

“The republican budget revenues received 4066 billion tenge. This is 131 billion tenge more or 103.3% of the plan. The growth rate compared with October 1, 2017, was 119.5% or 662 billion tenge. Of these, non-oil revenues increased by 501.4 billion tenge,” said Smailov.

Expenditures of the republican budget amounted to 7.092 trillion tenge, or 99.2%. Compared to September 1, the development has improved. The expenditures of local budgets amounted to 3,496 trillion tenge. Not executed — 32 billion tenge. This is two times less compared to the same period 2017. In the reporting period, target transfers in the amount of 523 billion tenge were transferred to the regions. At the local level, 506 billion tenge or 96.6% was spent. About 16.3 billion tenge was not executed, of which 1.5 billion tenge — budget savings. About 14.8 billion tenge was not spent. This is 2.7 times less than the amount of non-spending for the same period 2017.

The implementation of the Nurly Zhol State Program in the republican budget for 2018 provides 476.3 billion tenge. About 294.9 billion tenge was executed, or 99.6% of the plan for the reporting period. Mastering the annual plan amounted to 61.9%. The disbursement of funds allocated under the Nurly Zhol State Program in the regions is slightly lower than in the republic. As of October 1, 85.9 billion tenge was allocated. Nearly 84.9 billion tenge was ececuted, 831.8 million tenge was not executed.

Reporting on the tasks of the Ministry of Finance before the year end, Smailov, first of all, noted the fulfillment of the President’s Address in due time. Secondly, the refinement of the parameters of the republican budget for 2018 and the adoption of legal documents for its implementation together with the administrators of budget programs. Thirdly, the qualitative completion of the fiscal year for income and expenditure.

Following the results of the consideration of the results of the country's socio-economic development and the execution of the republican budget, the Prime Minister Bakytzhan Sagintayev noted that the GDP growth over the nine months was 4.1%. Compared with the results of the eight months 2018, there have been big changes. This is the result of joint action. At the same time, the attention of members of the Government was drawn to the available reserves.

The Government Project Management System shows that there are all possibilities for the execution of the Address of the Head of State, announced at the end of 2018. In this regard, the remaining two months or 51 days before the end of the year should be devoted to the execution of the instructions of the Head of State. Special attention is paid to opportunities in the manufacturing industry, including the pharmaceutical, textile (clothing, leather), etc.

On the issue of the disbursement of funds, to date, a clarification of the republican budget for 2018 has been sent to the Parliament, according to which the undeveloped funds were redistributed in the first nine months. As it was noted during the consideration of the results of the budget implementation over eight months, funds from central state and local executive bodies that have a significant non-development will be withdrawn and redirected to the implementation of the tasks of other state bodies. The Prime Minister noted that the undeveloped money will be redistributed at the end of each month.

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