Kazakhstan Country Economic Update, Spring 2018 : The Quest for a New Growth Model–The Urgency of Economic Transformation
A recovery in the oil sector boosted recent economic performance. While the recovery in global oil prices would have a welcoming effect for Kazakhstan in terms of enhancing the economy’s buffers and supporting growth, it may also reduce the perceiv...
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| Format: | Report |
| Language: | English |
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World Bank, Washington, DC
2018
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| Online Access: | http://documents.worldbank.org/curated/en/178631527661848309/Kazakhstan-The-quest-for-a-new-growth-model-the-urgency-of-economic-transformation-country-economic-update-Spring-2018 http://hdl.handle.net/10986/29961 |
| Summary: | A recovery in the oil sector boosted
recent economic performance. While the recovery in global
oil prices would have a welcoming effect for Kazakhstan in
terms of enhancing the economy’s buffers and supporting
growth, it may also reduce the perceived urgency for
transitioning to the new growth model, including the strong
need of continuing the macro-fiscal adjustment (by reducing
the nonoil deficit over the medium term) and pressing ahead
with structural reforms. More generally, a return to any
procyclical macro-fiscal policies during the upswing (due to
an insufficient fiscal consolidation) risks developing a
Dutch-Disease type of episode that could reduce economy’s
competitiveness and lower opportunities for diversification
away from oil and other non-tradable goods and services with
dynamics positively correlated to oil price movements. The
authorities should not miss the current window of
opportunity to adjust the macro-fiscal framework, clean up
the banking sector, and deepen structural reforms. To
transit to a new growth model and facilitate a sizeable
expansion of the tradable nonoil sector’s role in the
economy, the government must demonstrate significant
improvements to the rule of law, the quality of human
capital, and the investment climate. |
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