Country Economic Forecasts > Kazakhstan

On 20 August the authorities were effectively forced to introduce a freely floating exchange rate, tolerating a near 20% depreciation of the KZT to the US$. This followed extreme pressure on the tenge, reflecting a combination of global factors, including sharply lower oil and metal prices, the plunge in the Ruble, together with the devaluation of the Yuan in mid-August and worries that Chinese growth was slowly sharply. However, Kazakhstan was not alone in being affected by these pressures, with many other emerging market currencies also sliding.We expect further depreciation of the KZT over the next six months, given continued emerging market turmoil, persistently low commodity prices, and likely further depreciation in the Yuan. The fall in the KZT will push up inflation, eroding purchasing power, while it will also increase the burden of servicing external debts. However, GDP growth is expected to rise from 1.8% this year to 3.2% in 2016, albeit this is subject to downside risks.