Country Economic Forecasts > Kazakhstan

Oil wealth and rising prosperity have meant that political instability has not been a problem in Kazakhstan since President Nazarbayev came to power in 1989. But protests have broken out across the country in recent weeks and a shoot-out between police and gunmen left over a dozen dead in early-June. The underlying cause of the instability is the collapse in oil and other commodity prices, which has seen the economy move into recession and the KZT collapse amid a lack of political reform. The government's response has been to slow the reform effort and to clamp down on opposition.One of the biggest concerns for the population is high inflation. In May, consumer prices rose 0.5% on the month, lifting inflation to 16.8% a near 8-year high. But inflation is close to peaking and it should slow sharply from October as the impact of the earlier KZT plunge fades. We expect inflation to be just within the 6-8% inflation target by December.The economy is likely to have remained in recession in Q2 following the 0.2% GDP decline in Q1. Industrial output was down by 2.2% on the year in the first five months of 2016, with mining output falling 4.3% due mainly to lower oil production. After a 0.5% fall in 2015, we see GDP rising 2% in 2017, with a pick-up to 4-5% then forecast for 2018-19.