Kazakhstan's economy shrank 2.2 percent year-on-year in the first nine months of 2009 but officials stuck by a forecast for minimal growth in the year as a whole. The global crisis has threatened to end a decade of growth in the oil-producing former Soviet nation after crippling its long-booming construction and banking sectors. Coupled with a slump in commodity prices, the trend has led many economists to forecast Kazakhstan's economy to shrink this year.
"We think that the Economy Ministry's outlook of 0.1 percent (growth) is achievable and this indicator may be even higher," statistics agency chairman Alikhan Smailov told reporters after it reported numbers for January to September. In another positive signal, Smailov said that industrial output, which has been contracting so far this year, would grow 1.0 percent in the full year while the agricultural sector would grow by 9-10 percent.
Economic risks pose fresh challenges to President Nursultan Nazarbayev whose popularity after 20 years in power has been closely linked by Kazakhstan's 16 million people to their ability to expand incomes after chaotic post-Soviet years. Fielding questions from ordinary Kazakhs in a live television address last week, Nararbayev stressed that his government would work hard to bring back growth. "I hope we can finish this year without recession and achieve at least last year's levels," he said. The economy expanded by 3.2 percent last year.
The International Monetary Fund expects Kazakhstan's gross domestic product to shrink 2 percent over 2009 and says the country needs to solve problems in the banking sector to facilitate recovery. The State Statistics Agency said in a statement the pace of economic decline had slowed to 2.2 percent in January-September from 2.4 percent in January-June.
The agricultural sector grew by 1.7 percent in January-September year-on-year while the industrial sector contracted by 0.4 percent, according to the latest data. Construction was down 8.9 percent in the same period while financial services contracted by 5.7 percent. In the key banking sector, the Kazakh lenders, BTA, Alliance and Astana Finance are in the process of restructuring their debts after going into default this year.
Earlier on Monday, Astana Finance said it had signed a term sheet agreement with foreign creditors laying out terms of its debt restructuring. The agreement signed on November 12 needs to be followed by a similar deal with domestic creditors, Astana Finance, which has sought a to slash $650 million off its $1.7 billion debt, said.