Kazakhstans Economic Overview and ADB Operations 03 September
Kazakhstan’s Economic Overview and ADB Operations 03 September 2017 Giovanni Capannelli Country Director, Kazakhstan Resident Mission Asian Development Bank www. adb. org / adbkarm@adb. org 1
Key Economic Indicators 2014 2015 2016 2017 (project. )* GDP growth (%) 4. 4 1. 2 1. 0 3. 0 Inflation (%) 6. 7 6. 6 8. 5 8. 0 Current account ($ bln) Exchange rate USD/KZT, average Oil Brent $/brl 6. 0 -5. 8 -6. 4 -3. 4 179. 3 222. 8 337. 9 330 99 52. 4 44. 0 50 -60 Kazakhstan *ADB estimates. 2
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An Economy that Follows Oil Exchange rate Economic growth 4
Medium/Long Term Growth Drivers • Economic diversification agriculture, manufacturing, services/renewables • Structural reforms governance, civil service, human capital development, privatization, competition, deregulation • Private sector development targeted 50% contribution of SMEs to GDP by 2050 • Trade expansion EAEU, BRI, regional connectivity, economic corridors, etc. 5
National Development Strategy Kazakhstan 2050 Strategy § To become one of the 30 most advanced economies in the world. Medium-Term Strategy: Third Modernization of KAZ § § § Accelerate technological upgrading and digitalization. Improve business environment and expand the private sector. Stabilize the macroeconomic environment. Enhance the quality of human capital. Support institutional change, ensure security, and continue the fight against corruption. Green Economy Concept § Increase renewable energy generation; promote energy efficiency; and decrease CO 2 emissions. § Reflect SDG targets, COP 21 commitments, and other global obligations in government strategies and plans. 6
Less State in the Economy • Privatization of over 780 companies • Reducing the state’s share in the economy to 15% of GDP by 2020 • Strengthening “Yellow pages” principles (limit government’s share in private sector) • Transformation of Samruk Kazyna into efficient company with high-level corporate standards (215 companies planned for privatization) • Improve efficiency of Kaz. Agro and Baiterek and limit their operations in private sector 7
FDI Flows to Kazakhstan, 2005 -2016 As of December 2015, total foreign investment in Kazakhstan reached $198. 5 billion, of which $125. 1 billion were net FDI Chart Title mln. USD 35000. 0000 FDI structure by sector 30000 Natural-resource based 61% sectors (mining, geological exploration) 25000. 0000 20000 Manufacturing industry 12% 15000. 0000 10000 Financial and insurance services, wholesale trade, construction 5000. 0000 27% . 0000 2005 2006 2007 2008 2009 2010 Gross FDI inflow 2011 2012 2013 2014 2015 2016 Net FDI inflow Source: NBK 8
Opportunities and Challenges for FDI in Kazakhstan Opportunities • Natural resources • New strategy for renewable energy • Labor market • Favorable business environment • Eurasian Economic Union / Belt and Road Initiative Challenges • Political risk • Governance, bureaucracy • Global and regional competitiveness • Rule of law • Institutional coordination 9
Asian Development Bank § Founded in 1966 § 67 members 48 in Asia-Pacific 19 outside the region § Lending 2016: $31. 7 Bn - Energy: $10. 4 Bn - CW Asia: $8. 2 Bn § TA Grant 2016: $320 Ml § KAZ joined in 1994 - Astana office (1999) - Almaty office (1997)
ADB Strategic Priorities - Inclusive Growth - Environmentally Sustainable Growth - Regional Integration 11
Energy Priorities and Trends • Sustainable energy and low carbon development – Accelerate clean energy development – Maximize access to energy for all – Promote policy reforms in the energy sector to support low carbon development • Increasing energy sector lending – $16 billion pipeline (2018 -2020) 12
Clean Energy Projects • • • Solar and Wind Hydropower Concentrated Solar Thermal Power Solar Rooftop Program Solar-Wind-Diesel Hybrid Off-grid Prepaid Solar Photovoltaic 13
ADB Operations in Kazakhstan • During 1994 -2016 Kazakhstan received a total of: – 30 sovereign loans ($5 billion) – 8 private sector loans ($455 million) – 85 technical assistance projects ($37 million) • Key Sector of ADB operations – Transport – Finance – Agriculture and irrigation – Water Supply and Sanitation – Energy
ADB 2017 -2021 KAZ Partnership Strategy Support economically diversified, socially inclusive, and environmentally sustainable growth Strategic Pillar 1: Strategic Pillar 2: Strategic Pillar 3: Econ. Diversification Inclusive Development Sustainable Growth Improve access to finance and promote private sector development to enhance competitiveness and support the production of tradable goods and services Address infrastructure bottlenecks, support service delivery across the country, and strengthen governance and institutions to reduce spatial inequalities and improve the quality of life Promote energy efficiency and the use of renewables; support adaptation and mitigation efforts to foster green growth and lessen the vulnerabilities associated to climate change Cross-cutting priorities: Macroeconomic Resilience, Regional Cooperation and Integration, Support to Project Finance and Public-Private Partnerships, and Gender Mainstreaming
Energy Sector Priorities for KAZ • Expected Outcomes – Decreased energy intensity of GDP – Increased renewable energy generation – Reduced carbon dioxide emission levels • Areas of Assistance – Energy efficiency – Electrical power transmission – Air pollution reduction – Private sector operations and PPPs – Corporate governance reforms and privatization – Knowledge support, capacity development, and policy dialogue 16
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