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Kazakhstan Infrastructure Report Q4 2009Published by: Business Monitor International Published: Oct. 8, 2009 - 69 Pages Table of Contents
AbstractInfrastructure spending, which has felt the strain of the slowdown, has continued to feel it in 2009. Thegovernment’s willingness to plough money into the economy, and some big loans from foreign lendersand multilateral institutions for major projects, will soften but not eliminate the pain. Kazakhstan’soutlook is brighter than many countries, thanks to its natural resources and its position as the potentialbridge between China and Europe.In BMI’s Q409 Kazakhstan Infrastructure Report we forecast that construction industry value willcontract by 1.39% to a value of KZT1.574 trn (US$11.66 bn) in 2009.. Construction spending will thenshow respectable growth of 2.88% in 2010 before accelerating to more than 6% annual growth in 2011and then to more than 9% growth by the end of our forecast period, which has been extended to 2014. The country’s construction industry accounts for just below 10% of its GDP. The percentage creepscloser to the 10% mark over the years of our forecast, but doesn’t climb above it. Kazakhstan’s GDP declined 2.3% in the first half, according to the country’s statistics agency. That isbetter than initially feared for the first half, but still confirms the impression of an economy that isn’twithstanding the global economic slowdown. BMI now forecasts GDP in 2009 to contract 1.9% after anestimated 3.0% growth in 2008. Our forecast is for the economy to resume its expansion in 2010, at a rateof 2.4%, and then accelerate to 5.5% growth in 2011. For many years Kazakhstan represented something of an infrastructural bonanza. Kazakhstan is a sparselypopulated, increasingly wealthy, landlocked country, which has a government committed to developingroad links to countries that provide access to major export markets. Even amid the economic slowdown,the country’s ambitions in the transport sector can sound impressive in their sweep, involving as they docountries from the Middle East to Asia. Kazakhstan is a crucial part of the Silk Road terrestrial trading routes between the Asia-Pacific region(China especially) and Europe (Russia especially). In a sign of the international commitment to openingthis new silk route, the World Bank and Kazakhstan signed the agreement on a loan of more than US$2bn in the latest quarter to help build the Kazakh portion. Estimates of the cost of this transit corridor canrun to more than US$7 bn. The crucial hydrocarbons industry needs substantial new investment if production and exports are toincrease as planned. The government is again stepping in with KazMunaiGaz taking over the Pavlodarrefinery in the latest quarter and planning hundreds of millions of dollars in investment. Further, the USSR-era has left Kazakhstan with a curious legacy: the need to import electricity and gas tosupply the major cities in the south and the southeast of the country, including Almaty, which is theformer capital and still by far the most populous city in Kazakhstan. The government has a vested interestin promoting pipelines and power distribution networks that will enable Kazakhstan to meet itsrequirements with locally produced energy. For most developing countries, growth and foreign investment depends on solid governance, improvingtransparency and a reduction in political/policy risk. Thanks to its geographic position and its resources,Kazakhstan has been in an unusual position where its low ranking in many surveys of transparency andgovernance has not deterred investments. Such is its strength that even a scandal involving uraniumreserves that seemed to reach the upper ranks of the country’s establishment doesn’t seem to have donemuch damage. The China National Petroleum Corp.’s joint venture with KazMunaiGaz to buy Kazakhstan-basedMangistauMunaiGaz from Indonesia's Central Asia Petroleum, agreed in the third quarter and nowexpected to close on Dec. 1, shows the appetite for the country’s resources. State-owned Kazakhstan Development Bank, together with the World Bank and the European Bank forReconstruction and Development, has financed the development of Kazakhstan’s electricityinfrastructure. State-owned energy company KazMunaiGaz’s annual capital expenditure - whichgenerally can be thought of its contribution to infrastructure development in the country - amounts tomore than US$2bn annually. This report includes a lengthy profile of this important company. PresidentNursultan Nazarbayev estimated in front of foreign investors in that latest quarter that all the spending todevelop and diversify the economy could add 50% to GDP in 10 years. Every report of rising energyprices and some mineral prices should reinforce optimism about Kazakhstan’s future. Asia seems at times to be leading the world out of the global financial crisis. If the trend of growthresumption is confirmed - a big if - investors will find it easier to raise the funds they want. Kazakhstan,despite questions about corruption in high places, is well-placed to benefit. Get Full Details About This Report >> |
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