ASTANA (Interfax-Kazakhstan) – The government of Kazakhstan revised GDP growth outlook for 2016 downward by 2.1%.

“Taking into consideration the expected output by industries, the GDP growth outlook now stands at 2.1% for 2016, at 3.6% for 2017 and 2.9% for 2018”, according to the draft budget for 2016-2018 submitted to the parliament. This is compared to the previous outlook of 2.2% for 2016, 3.3% for 2017, 3.6% for 2018 and 4.1% for 2019.

Real GDP growth in 2015 is expected to come in at 1.5%. In 2014, the Kazakh economy expanded 4.3%.

The forecast of nominal GDP is at 40.719 tln tenge for 2015, 44.005 tln tenge for 2016, 48.296 tln tenge for 2017 and 52.898 tln tenge for 2018. Current FOREX rate is 243.1/$1.

According to the government’s forecast, the industrial output will decline 0.3% in 2016, remain unchanged in 2016 and will grow 3.4% in 2017 and 1.7% in 2018. The mining industry is expected to shrink by 0.4% in 2015, by 1.3% in 2016 and grow by 3.4% in 2017 and by 2.4% in 2018.

Kazakhstan’s medium-term growth outlook remains constrained, due to weak external demand and lower and increasingly volatile oil prices. Since Kazakhstan’s economy depends heavily on the oil sector — which accounts for an estimated 20% of GDP, 50% of fiscal revenues, and 60% of exports — we expect GDP growth to slow to 2.8% in 2015-2018 against an average of 6% in 2010-2014.

The scenario assumes the limited contribution of net exports to GDP due to a flat oil production, unless the large offshore Kashagan oil field comes fully onstream earlier than 2018. The growth outlook is also dampened by the expected impact on consumer demand from currency devaluation and weak consumer lending, as well as lower-than-expected exports of other raw materials.