COVID-19 called biggest shock to Kazakhstan economy in 20 years
The report says that a renewed focus on reforms in logistics, digital communications, and the financial sector could support the private sector in seeking new opportunities.
The COVID-19 pandemic is the biggest shock to Kazakhstan’s economy in almost two decades, Kazpravda.kz refers to the economic update of the World Bank on Kazakhstan (summer 2020) "Navigating the crisis", stating.
In 2020, Kazakhstan's economy may contract by 3% for the first time since the late 1990s, followed by a moderate recovery of 2.5% in 2021, according to Kazakhstan Economic update of the World Bank (Summer 2020) "Navigating the Crisis".
Despite modest GDP growth of 2.3% in the first quarter of this year, economic activity slowed significantly in the following months as a result of falling commodity prices, reduced trade and the impact of measures to prevent the spread of COVID-19.
Consumer demand increased by only 1.2%, which is a consequence of growing concern, a decrease in consumer confidence of the population due to the coronavirus pandemic and the imposed quarantine. Investment growth is also slowing and will largely be supported by foreign direct investment in the oil and gas sector and investment in housing. Inflation pressure is expected to remain through the end of 2020, but will slow as the effect of exchange rate depreciation gradually dissipates. Inflation this year will remain above the central bank target of 6 percent, following depreciation of the tenge.
The authorities have taken proactive measures to contain the COVID-19 pandemic, and the accumulated budgetary reserves have allowed the government to introduce a package of measures to mitigate the impact of COVID-19 on the economy, the report says. However, weak oil demand and prices, as well as a protracted pandemic, pose serious risks to the economic outlook. It may be wise for the authorities to consider using available resources to provide additional assistance to the poor and vulnerable, protect productive assets and accelerate reforms to support economic recovery, Sjamsu Rahardja, Senior Economist of the World Bank Country Office in Kazakhstan, believes.
It is noted that prolonged crisis is likely to increase poverty and can increase inequality in Kazakhstan. Preliminary estimates suggest that the poverty rate may rise in 2020 from a projected 8.3 to 12.7 percent – equating to more than 800,000 additional people living in poverty.
The shock to Kazakhstan’s labor market, due to both the pandemic and the mitigation measures, had severe implications for employment, particularly sectors that employ low skilled workers. Unequal access to quality education, especially during lockdown, can negatively impact human capital development for the vulnerable population. School closures could translate into more than a third of the school year lost in learning, and such an impact could mean a downgrade in the Program for Student Assessment International (PISA). The proportion of students with functional literacy below the threshold is estimated to rise by 3 percent (from 64 to 67%).
The rate of loss in education and training due to COVID-19 will have an impact on the economy for decades. This impact is estimated at 2.9%, resulting in a total economic loss of up to US $ 1.9 billion per year, noted Jean-Franзois Marteau, Country Manager of the World Bank for Kazakhstan. He believes it is necessary to give priority to education and skills development, increase funding for the education sector, restore learning for students who have lost most during the pandemic. This means that expanding access to quality distance education and mid-term modernization of education will be critical to mitigate the expected decline in the quality of human capital in Kazakhstan caused by the pandemic.
The report says that a renewed focus on reforms in logistics, digital communications, and the financial sector could support the private sector in seeking new opportunities.
Source: kazpravda.kz
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Kazakhstan turns to high-value added manufacturing with building polyethylene plant it Atyrau region
Images | primeminister.kz
Prime Minister of the Republic of Kazakhstan Olzhas Bektenov met with the heads of the world's largest oil and gas chemical companies – President of China Petrochemical Corporation (SINOPEC) Zhao Dong and Chairman of the Board of SIBUR LLC Mikhail Karisalovб primeminister.kz reports.
The key issue is the joint construction of the first integrated gas chemical complex for polyethylene production at a cost of about $7.7 billion and a capacity of 1.25 million tonnes per year, which will account for 1% of the world's total capacity.
A tripartite protocol was signed during the meeting, officially finalising SINOPEC's entry into the project. The ownership structure of the plant is as follows: KazMunayGas 40%, SINOPEC 30%, SIBUR 30%.
Head of the Government emphasised the importance of the project due to its focus on the production of high value-added products.
A gas separation complex (GSC) will be built at the Tengiz field to supply the "Polyethylene" project with feedstock (ethane). The capacity of the GSC is 9.1 billion m3 of dry gas processing per year, of which 1.6 million tonnes of ethane is expected to be produced.
Ethane will be sent through the main pipeline from Tengiz to the Karabatan site (territory of FEZ NINT, Atyrau region), where the polyethylene plant will operate.
It is planned to produce about 22 grades of polyethylene using American licence technologies of Chevron Phillips and Univation, 40% of which will be premium grade. A wide range of applications for both industrial and household purposes makes polyethylene the most popular polymer in the world.
Polyethylene is used in the fields of medicine, prosthetics, defence, food industry, construction, space industry and others. This polymer is used in the production of a wide range of goods: from plastic wear-resistant pipes, construction materials, medicines, syringes, prostheses to bulletproof vests, clothing for astronauts and car parts. Target markets include Kazakhstan, CIS countries, China, Turkey and European countries. At the same time, for domestic consumption, the realisation price will be lower than the import price.
The Head of State has identified deep processing of hydrocarbons as one of the key areas of development of the oil and gas sector. The priority for our economy is high conversion production producing products with a rapid increase in added value in the technological chain with an export orientation. The added value between the initial feedstock ethane and the third conversion product polyethylene increases 20 times, from $80-90 to $1600-1800 per tonne. The Polyethylene project will certainly give a serious impetus to the development of both the manufacturing industry and the country's economy as a whole. According to experts' calculations, the contribution to the country's GDP by 2030 from the implementation of the project is estimated at approximately 1.2%," Olzhas Bektenov said.
The construction of the plant is planned to be completed by 2029. During the construction period more than 8 thousand jobs will be created, during the operation period about 850 jobs will be created.
It was noted that the project is realised with the support of the Government. The plant will be built on the territory of a special economic zone with the provision of appropriate infrastructure and special tax regime. In this regard, Prime Minister emphasised the attention of the project participants to the need to maximise the use of local potential.
We on the part of the state provide comprehensive support in the implementation of projects important for the country's economy. At the same time, we expect you to increase the share of local content. For this purpose, it is necessary to determine the list of goods and equipment that will be mandatorily purchased from domestic producers. Special attention should be paid to training of Kazakhstani specialists and transfer of competences. It is important for us to maximise the attraction of local personnel, including for management positions in the project. We count on a similar approach in the implementation of other joint projects," Prime Minister emphasised.
Thus, in addition to the plant "Polyethylene" it is planned to build a gas separation complex and a trunk pipeline.
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Olzhas Bektenov and Head of the Sakha Republic Aysen Nikolayev discuss issues of trade and economic cooperation
Images | primeminister.kz
Prime Minister of the Republic of Kazakhstan Olzhas Bektenov met with the Head of the Republic of Sakha (Yakutia) Aysen Nikolayev, who arrived on a visit to Astana to participate in the opening ceremony of the Days of the Republic of Sakha in Kazakhstan, primeminister.kz reports.
The Republic of Sakha contributes to the development of Kazakhstan-Russia trade relations. The implementation of agreements reached at the level of the presidents of Kazakhstan and Russia on further expansion of bilateral trade and economic cooperation was reviewed.
Over the year, trade turnover between the regions of Kazakhstan and the Republic of Sakha has grown almost 2-fold, exceeding $160 million, with over 99% of exports of Kazakhstani goods. During the discussion a wide potential of mutual trade was noted and the parties' readiness to increase turnover in agricultural, industrial and IT spheres was outlined.
The parties confirmed their intention to intensify joint work on expanding the range of supplied goods and services, establishing direct contacts between business circles. It is expected that a new impetus to trade and economic relations will also be given by the launch of five major cross-border trade centres in Kazakhstan, including the Eurasia Cross-Border Trade Centre on the border with Russia.
Special attention was paid to the exchange of experience and technologies in the field of creative industries and digitalisation, as well as interaction between research institutes and educational institutions of Kazakhstan and the Republic of Sakha.
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