For Kazakhstan, 2022 was a shocking, but not an awful year. However and unfortunately, 2022 was the year of lost opportunity for Kazakhstan.
Aidarkhan Kusainov, famous economic observer discusses above in his telegram-channel. Literal translation below:
Was 2022 a Crisis Year for Kazakhstan?
The backdrop is well-known: war, sanctions, global inflation, more robust monetary policy, recession risk. Now, let us assess facts without emotions.
Global inflation is the growth in oil and gas prices.
Problems in nutrition market and sanctions cause growing wheat prices. Other horrors are the growing prices for metals.
Sanctions were not dropped on Kazakhstan, likewise on no one else around Russia – it was clear from the very start. Take a look at all those horrors in the world, and it will become obvious that dropping sanctions on our oil (which is not very much ours), wheat and metals is stupidity.
Lost Opportunity
In the outcome of above, in 2022, we achieved a record in exports – oil prices are the highest since 2011, so oil exports are the top business now. We sold by one-third more wheat, than we did in 2021 (10% of growth stood for volumes, others – for growing prices). We also sold more ferrous alloys (by 39%), copper and zinc (14% and 24%) in January to October.
Russian demand helped out – Russians would here to buy goods. The parallel, “gray” and individual imports to Russian were of help, as we. Ruble hardening made them less competitive, thus opening up window of opportunity for our goods.
In general, in 2022, all economies, surrounding Russia showed some glorious acceleration. As for Kazakhstan, we showed the least growth rates in the last 7 years, except of 2020.
As human beings we do understand arguments like – “Oh, it was a severe and unclear year of crises, but we prevented the drop down in economic growth”. Objectivity, however, may not be disregarded.
The past year was very good for us, if not the best, in many instances, since 2012. But we managed to show the worst growth pace, and we systemically reduced the incomes of common people.
How We Enter 2023?
(а) Oil, wheat and metals have been falling down, after 2022. We promised to curtail oil production by 2%, for OPEC+ deal. In the wheat market, we are seeing drop down in prices and global excess in stocks. There is nothing positive to be seen here – the fog, in the best case.
(b) Population income began to drop down in the second half of the previous year. That is likely to proceed until the middle of 2023, as a minimum. We got no instruments left to somehow help people increase their incomes. Moneys were actively injected in masses in 2019-2022. If we do it now, that we have inflation, that will only add into complication.
(c) Bidigitate inflation, which is unlikely to return to single-digit condition, as per numerous forecasts. Most likely, it will keep floating at the level of 14 to 18 (18 is my assessment).
(d) Russians have reformatted themselves and built up new logistics through Turkiye and Trans-Caucasus. They are actively implementing import substitution and their exchange rates have returned to market level (80), so it is now more profitable to bring their goods here.
(e) Global prices drop down will result in drop down in volumes of mandatory sales of operating profits. Withdrawals from the National Fun have been reduced, not significantly, but still. Export customs levies will drop down several fold and we will face exchange rate uncertainty. When we adjust that rate, inflation will jump above 20%.
So, that is the future. Obvious is that we need to change something”.
