OREANDA-NEWS. August 07, 2007. When reporting on economic development in H1, Mr. Berdibek Saparbayev, Vice Minister of Economic Affairs and Budget Planning, noted certain escalation of inflation, reported the Official website http://en.government.kz.

“In June, average annual inflation rate reached 8,1%, while in the previous four months it was kept in the range of 7,6-7,8%. Escalation of base inflation is a worrying factor. Inflation rate – without regard to growing prices for vegetables, energy, utilities, transport and communications – grew up to 7,4% in June (91% of the overall inflation rate). This is a sign of fundamental economic factors causing the inflation”.

According to him, money supply grew by 20%, money in cash – by 3%, with loans growing two-fold.

Head of the National Bank Mr. Anvar Saidenov noted that inflationary processes are somewhat contradictory. “Deflation was registered in the first months, including May; however, in June and July inflation gained momentum. “As a result, average annual inflation rate had reached 8,8% by the end of July”, A. Saidenov said.

The growing gap between households’ income and labor efficiency; robust economic growth; active expenditure policy of the state; external borrowing (including borrowing by banks) have been among the factors behind the inflation escalation.

A. Saidenov informed that for the first half of 2007 the National Bank sterilized KZT 257 billion 700 million. National Bank will further increase rates on notes by 0,5-1%. The Bank does not rule out increase in refinancing rate up to 9,5% in October. Besides, National Bank intends to tighten minimum reserve requirements starting from August 29. “Through such tightening we will have the banks withdraw another KZT 72 billion out of turnover”, Mr. Saidenov said.

Kazakhstan’s foreign trade turnover in the first half of 2007 made up USD 36,6 billion, said Mr. Berdibek Saparbayev, Vice Minister of Economic Affairs and Budget Planning.

Imports account for USD 14,8 billion, with exports being responsible for the rest USD 21,8 billion. Imports growth rate exceeds growth rate of exports, Mr. Saparbayev elaborated. Imports grew by 48,8% y-o-y, with exports growing by 25,8 %. International reserves, including the National Oil Fund’s assets, grew by 20,5% to reach USD 40 billion.

According to the Ministry of Economic Affairs and Budget Planning, average cost of construction of 1 sq meter augmented by 35,5% in the first half of 2007 – mainly due to growing prices for construction materials. In the first half of 2007 alone Kazakhstan imported construction materials totally worth USD 1,5 billion, 68% up as compared to the like period of 2007.  

Apart from construction materials, Kazakhstan is importing sand and lime. “For the first half of 2007 Kazakhstan imported 60 thousand tons of sand worth USD 1 million 200 thousand”, Mr. Saparbayev noted.