National Bank of Kazakhstan improves 2025 GDP forecast, worsens inflation outlook

ASTANA. Nov 28 (Interfax) - The National Bank of Kazakhstan has updated its economic growth forecasts for 2025-2027, the regulator's press service said.

The GDP growth outlook for 2025 has been upgraded to 6.0%-6.5% from the previous 5.5%-6.5%, reflecting faster-than-expected oil production growth, as well as stronger investment and consumer demand in recent months, partly driven by expectations ahead of the VAT reform planned for 2026, the National Bank said.

The forecast for 2026 has been lowered to 3.5%-4.5% (from 4%-5% previously), due to the high statistical base from 2025 and the anticipated dampening effects of tax and fiscal reforms and budget consolidation measures on domestic demand.

For 2027, the regulator now expects GDP growth of 4.0%-5.0%, compared with the earlier projection of 3.5%-4.5%. Growth that year will be supported by expanding investment activity, moderate consumer demand and rising oil output, the central bank noted.

The baseline scenario continues to assume an average Brent crude price of $60 per barrel through the end of the forecast horizon (2027).

The National Bank has also revised its inflation projections for 2025-2026 upwards while maintaining its outlook for 2027.

For 2025, the central bank now expects inflation to range between 12.0% and 13.0%, compared with its August estimate of 11%-12.5%. In 2026, inflation is forecast at 9.5%-12.5% (previously 9.5%-11.5%). By end-2027, inflation is expected to ease to 5.5%-7.5%.

"The revision reflects the significant overshooting of the forecast this year and the rise in inflation expectations. At the same time, it incorporates a more predictable adjustment of regulated prices within the revised pace of the 'inflation + 5%' reform in 2026-2027," the regulator said.

The wider forecast band for 2026 stems from heightened uncertainty related to the implementation of tax reform, the response of aggregate demand, the substantial increase in quasi-fiscal financing, and its expansionary impact on the economy.

"Disinflation over the forecast horizon will be supported by moderately tight monetary policy, fiscal consolidation, and measures under the Joint Action Program [developed by the government and financial regulators to stabilize and improve public welfare in 2026-2028]. Pro-inflationary pressures will arise from further liberalization of the fuel and lubricants market and stronger domestic demand driven by quasi-fiscal stimulus," the regulator said.

Key forecast risks include intensifying imbalances between domestic demand and insufficient supply, a possible acceleration in external inflation and inflation expectations, as well as second-round effects from increases in regulated tariffs, fuel and lubricants prices, and VAT.

"A major uncertainty factor is the growing impact of economic financing by Baiterek National Managing Holding JSC (estimated by the government at 8 trillion tenge, or 4.4% of GDP in 2026), which could add to inflationary pressure and partially offset the effects of fiscal consolidation," the National Bank said.

On Friday, the regulator kept the base rate unchanged at 18% per annum.