Kazakhstan Infrastructure Report Q2 2016
BMI View: Kazakhstan is facing strong economic headwinds from falling oil prices and a devaluingcurrency. Nevertheless, infrastructure investment is viewed as part of the long-term plan to diversify theeconomy and holds significant long-term potential, especially in the rail and energy industries. Thegovernment is also pledging significant funds towards residential construction for 2016-2020.
Latest Updates And Structural Trends
Growth in the construction industry will average 5.8% over our 10-year forecast to 2025, with thepossibility for this to improve towards the end of this period.
President Nazarbayev announced USD5bn in additional funding from the SWF and pension fund, withmuch of it allocated to affordable housing construction.
Residential building starts grew 18.9% y-o-y in 2015, while investment in house building in tenge termsgrew 17.2% in 2015, pointing to the fact that economic headwinds are yet to filter down through theeconomy, while government spending provides buoyancy.
Having downgraded our forecasts for the Kazakh tenge and oil price in 2016, we have also downgradedour forecast for real GDP growth to 1.0% from 1.6% previously.
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