About the World Bank Report on the economy of Kazakhstan

In the manufacturing industry, growth was achieved by 3.8%, including in mechanical engineering - by 13.9%, food production - by 4.1%, pharmaceuticals - by 23.2%, light industry - by 7.3%, paper production - by 15.7%, chemical industry - by 3.6% and the production of finished metal products - by 18.6%. Construction volumes increased by 6.3%, housing commissioning - by 7.5%, or about 7.0 million square meters. In agriculture, a steady growth of 2.5% was achieved.

At the same time, in January-June, the volume of services rendered decreased compared to the same period in 2019. The decreasing is 6.9%. The largest decrease is observed in Atyrau (by 17.7%), Mangistau (by 9%) regions and Almaty (by 12.4%).  

In Nur-Sultan (by 17.5%) and Almaty (by 18.5%), the largest decline in retail trade volumes was observed in the first half of the year.

There is also a decline in retail trade in all regions of the country. The smallest decrease is observed in the city of Shymkent (by 2%), Kostanay (by 2.3%), Almaty (4.1%) and Zhambyl (4%) regions. 

The situation shows how strongly the indicators of the two largest cities affect the country's economic development, which once again underlines the need to develop other cities and turn them into "growth points".

The forecast scheme for territorial and spatial development of the country until 2030 and the State Program for regional development for 2020-2025 provide for the development of 18 FUA (functional urban areas). This is in addition to Nur-Sultan, Almaty and Shymkent, 15 cities of regional significance. All of them are intended to become "growth poles" and drivers of the country's socio-economic development in the future. It is obvious that despite the frightening forecasts, the state has the tools to overcome the crisis and restore the economy.

There is also an indicator of subjective poverty, which can be identified based on public opinion, and then compared with the income of the population. There are other parameters of this social phenomenon, so focusing only on one or two indicators will not give a complete picture.

Speaking of the situation as a whole, the current global crisis has surpassed all the crises of the past decades in its destructive power. All countries of the world have faced such consequences as rising unemployment, falling real incomes, rising poverty, etc. 

It is important to note that in these difficult conditions, the Government of the Republic of Kazakhstan has taken measures to mitigate the consequences of the global crisis: 

KZT 1 trillion 788 billion was allocated for employment and infrastructure development.  The money is used to repair roads, bridges, reconstruct housing and social infrastructure within the framework of the Employment Roadmap, as well as to build housing under the Nurly-Zher State Program. 

KZT 1 trillion 34 billion was allocated to support small and medium-sized businesses.  Until June 1, 2020, all taxes and social payments were deferred for SMEs. 

KZT 150 billion was allocated for the development of the agro-industrial complex. For agricultural producers, the land tax rate has been reduced to 0%. In the field of livestock breeding, it is possible to pay VAT using the offset method for imported goods.

Overall, significant support was provided in the 29 most affected sectors of the economy.

During the emergency, in April and May 2020, a total of 4.5 million people received payments of KZT 42,500. After the decision to tighten quarantine measures in July, the payment of KZT 42,500 was assigned to 2 million 80 thousand people. The funds were transferred to 2 million 58 thousand Kazakhstan people.

All the above measures helped to mitigate the impact of the global crisis on the economy of the Republic of Kazakhstan. Thus, despite the decrease in real wages in June (by June last year) in real terms by 5.6% - for the period January-June 2020 by January-June 2019, there was an increase in the real wage index by 5.5%.

As for monetary payments to people who lost their jobs due to the closure of enterprises and isolation during the emergency, in total, about 4 million people received the first benefit in the amount of KZT 42,500.  The largest number of recipients was in the Almaty region – 567.3 thousand people, the smallest number of recipients in the North Kazakhstan region - 90 thousand people. In general, 941 thousand people received benefits in three cities of national significance (Nur-Sultan, Almaty, Shymkent). In the oil-producing Western regions (Atyrau, Aktobe, West Kazakhstan, Mangistau), the number of recipients was 590 thousand people. In the Central-Eastern industrial regions (East Kazakhstan, Pavlodar, Karaganda), 635.1 thousand people received benefits. In the Southern regions (Almaty, Zhambyl, Kyzylorda, Turkestan), the number of recipients was 1.4 million people. In the Northern regions (Akmola, Kostanay, North Kazakhstan), the number of recipients was 378 thousand people.

As the analysis of the number of recipients of the first social payment in the amount of KZT 42,500 shows, the most recipients are in the agricultural southern regions. 

In this regard, taking into account the structural features, the diversification of their economies based on accelerated development of manufacturing, agriculture, transport and logistics, and high-value-added services will be of key importance for agricultural and industrial regions. 

As for supply, according to the IEA, global oil production in June fell by 2.4 MB/d to a nine-year low of 86.9 MB/d. Strict compliance with the OPEC+ agreement on oil production and sharp declines by other producers led by the US and Canada have reduced global oil production by almost 14 MB/d since April. If the OPEC+ commitments to reduce oil production are met as agreed, global oil production could fall by 7.1 MB/d in 2020 before a modest recovery of 1.7 MB/d in 2021.

Thus, international financial institutions and energy agencies are expected to reduce world oil prices by 41.3% (37.6$/brl) in 2020 relative to the average level of 2019 (64$/brl). In 2021, oil prices are expected to rise to 43$/brl (the range of fluctuations is 37.5-49.6$/brl).

Assuming an average annual oil price of 40$/brl, oil and gas condensate production - 86 million tons, the average annual exchange rate - KZT 416 per $1 and also taking into account the quarantine measures and financial means of anti-crisis measures, we expect a slight positive growth in the manufacturing industry and a decline of 3.1% in the mining industry.

The US Department of Energy predicts that global oil and liquid fuel consumption will average 92.5 million barrels per day in 2020, down 8.3 million barrels per day compared to 2019, and then increase by 7.2 million barrels per day in 2021. 

OPEC has improved its forecast for a decline in global oil demand in 2020 by 100,000 barrels per day (b/d). Thus, OPEC expects a drop in global demand by 8.9 million b/d this year, according to the July report of th.organization.

At the same time, according to the consensus forecast, the average price for Brent oil will be 38 $/brl, which is much better than we expected at the end of March.

At the same time, our country's commitments to reduce oil production under the OPEC+ agreement, according to our forecasts, will lead to a decline in the mining industry by the end of 2020. So, at the price of oil 38 $/brl on average for 2020 and oil production of 86.3 million tons, the mining industry will decline by 3.1%. 

Relatively favorable conditions on the metal market and government support measures will contribute to the growth of the manufacturing industry by 2.2% in 2020.

The fall in oil prices has led to a reduction in taxes in the oil-producing regions. Thus, in January-June 2020, compared to the corresponding period of 2019, the volume of taxes to the state budget in the oil - producing regions decreased by almost 30%, including in the Aktobe region - by 32.3%, Atyrau - 27.1%, West Kazakhstan - 31.4%, Kyzylorda - 18.3%, Mangistau - 36%.

The current situation has a negative impact on these regions in terms of employment, income, and overall economic development. 

Even before the start of the pandemic, the Forecast Scheme of the country's territorial and spatial development until 2030 noted that due to the continued depletion of natural resources in the extracting regions, it would be necessary to take measures to further diversify the economy, create jobs, and reduce budget revenues. In addition, it is necessary to provide a set of measures to facilitate voluntary relocation.