Second COVID-19 wave could pressure Kazakhstan's payments balance, exchange rate

BAKU, Azerbaijan, Jul.13 By Nargiz Sadikhova - Trend: Second wave of the pandemic would put pressure on the balance of payments and exchange rate in Kazakhstan, Nicolas Blancher, IMF Mission Chief for Kazakhstan told Trend. Blancher said that currently IMF projects a decline in Kazakhstan’s real GDP of 2.7 percent in 2020. “This will largely reflect lower oil production, in line with the country’s commitment under the OPEC+ agreement, and a moderate contraction of non-oil activities due to the pandemic containment measures. Growth is expected to return to positive territory in 2021,” he said. He however noted that these projections are subject to large uncertainty at this point. “Over the longer term, we expect that non-oil growth will stabilize around four percent, in line with our current estimate of Kazakhstan’s growth potential,” he said. Blancher added that a positive Kazakhstan’s real GDP change scenario could result from stronger growth in key trading partners (e.g., Russia, EU, China), an oil price recovery, as well as accelerated reforms following this crisis. “This would help enhance public sector efficiency and promote private sector development and economic diversification. A negative scenario could materialize because of a second wave of the pandemic, which would delay the recovery; recurrent oil price volatility, which would put pressure on the balance of payments and exchange rate; or a durably increased state footprint in the economy, which would limit the scope for private entrepreneurship,” Blancher said. The first two cases of coronavirus infection were detected in Kazakhstan among those who arrived in Almaty city from Germany on March 13, 2020. The total number of coronavirus cases confirmed in Kazakhstan since the virus was first confirmed in the country amounted to 59,899 cases. This includes 34,190 people who recovered from the coronavirus, and 375 patients who passed away. On Jun. 2, 2020, an announcement was made that Kazakhstan is reintroducing quarantine regime as the COVID-19 cases count is increasing countrywide. By a decision of an intergovernmental commission, the quarantine is being imposed for a period of 14 days starting Jul. 5, 2020. --- Follow the author on twitter: @nargiz_sadikh