Forum Explores Economic Challenges, President’s Role in Economic Changes

By Yernat Mukhamadiyev

ASTANA – The challenges Kazakhstan has faced and is facing now in building a free market economy, and the role of President Nursultan Nazarbayev in this process, were among the subjects of an international forum held at the Nazarbayev University on November 29.

Kazakhstan is the largest economy in Central Asia. It has built a stable and prosperous society that is rapidly catching up with the developed world. During its 20 years as an independent nation, Kazakhstan has made progress in implementing complex economic reforms to establish a democratic state with a market economy. The country is rich in minerals and raw materials and is able to meet its own needs for mineral resources while also exporting large amounts of different raw materials and products.

“The wise policy of President Nursultan Nazarbayev and the efforts of the government helped Kazakhstan both to make a breakthrough in development and to win the recognition of the international community,” said former Prime Minister and current chief of staff to the President, Karim Massimov.

According to the country’s economists, Kazakhstan has made notable progress in the formation and development of a new model of economic development. The government has been working energetically to diversify the economy by creating new industry sectors to generate alternative income streams to the exploitation of natural resources. The government has set the goals of making Kazakhstan one of the top 50 countries with the most favourable business environments and one of the 10 leading financial centres in Asia by 2020.

Over the past decade, the development of the country and the diversification and modernization of its economy has been guided by a presidential decree of May 17, 2003 that implemented the national industrial and innovation strategy for 2003-2015. This strategy is focused on achieving economic diversification and shifting the emphasis in growth from extraction of natural resources to their processing.

In January 2010, President Nazarbayev in his annual address to the nation announced a new 10-year strategic development plan to 2020. This added an emphasis on sustainable development through accelerated diversification and increased competitiveness in the national economy.

“At the initiative of the head of state, wide-scale works were launched to ensure industrial-innovative development and social modernization,” said Nuraly Bekturganov, chairman of Parasat, the National Scientific and Technological Holding Company.

“These measures have moved Kazakhstan on to the road of founding a knowledge-based economy, which is the basis for the transition to the post-industrial stage of development. Now the growth trajectory of Kazakhstan coincides with the trajectory of developed countries,” Bekturganov said.

Macroeconomic stability is the basic condition for the country’s competitiveness, experts said. And they added that sustainable economic growth provides the basis for the modernization of the nation’s society.

Massimov has announced on his information portal that Kazakhstan is working to improve its macroeconomic environment to boost its international competitiveness.

The World Economic Forum’s Global Competitiveness Report 2011-2012 raised Kazakhstan from 26th to 18th place in the world in rating its macroeconomic stability. This rating placed Kazakhstan ahead of several developed and rapidly developing economies. Commenting on the report, the Ministry of Economic Development and Trade said the improvement in the country’s rating reflected the success of its macroeconomic policies aimed at fostering favourable conditions for investment and the development of the private business sector.

“From a macroeconomic point of view, last year was one of the most successful in the history of independent Kazakhstan. Exports reached $88.3 billion, including $55 billion in oil and gas exports,” Grigory Marchenko, chairman of the National Bank of Kazakhstan, told the forum.

“Today, Kazakhstan is an excellent example of a socially optimistic country. Its achievements in the last two decades in the economy, education, healthcare and social security demonstrate that the transition from the state of common prosperity to the state of real opportunities is possible. Kazakhstan is fully implementing its model of social-economic modernisation, which combines the advantages of both East and West, and is aimed at full-scale macro-regional and global cooperation,” Lothar-Theodor Lemper, president of the Otto Benecke Foundation told the November 29 forum.

Forum participants acknowledged the role that President Nazarbayev has played in creating the country’s economic model. He had a difficult mission to lead the country in its early years, they said. However, his vision and balanced policy strengthened the economy and rapidly increased the standard of living of the population, experts noted. Thanks to those prudent policies, Kazakhstan also successfully overcame the consequences of the 2008-9 global financial crisis.

Experts told the gathering that economic measures implemented by the government over the past four years have given the country protection from future international financial upheavals.

“The anti-crisis programme adopted by the government of Kazakhstan will prevent a recession in the country,” said Ruslan Grinberg, director of the Institute of Economics in Russia.

Massimov agreed that Kazakhstan was ready to withstand any new world economic crisis.

“The new decade is bringing new difficulties that we have to face. I can say that there is a high probability of a new economic downturn in the world,” he said. Therefore, the government has developed a new action plan to deal with any negative developments in the global economy.

Experts told the forum that Nazarbayev’s decision to jointly create the new Customs Union and Single Economic Space with Russia and Belarus was also important in insulating the country from any global downturn.

“President Nazarbayev’s support has been invaluable in the development of current integration processes in the Commonwealth of Independent States (CIS), the Eurasian Economic Community (EurAsEC), the Economic Cooperation Organization (ECO) and the Shanghai Cooperation Organization (SCO),” Nuridin Kayumov of Tajikistan, a member of the Eurasian Economic Club of Scientists, told the forum.

“The creation of the Customs Union between Belarus, Kazakhstan and Russia, the (anticipated) entry of the Kyrgyz Republic and Tajikistan into it, and the future creation of the Single Economic Space (SES) are realizations of initiatives to develop the Eurasian space that were introduced by President Nazarbayev,” Kayumov said.

Experts noted that one of the biggest challenges facing Kazakhstan’s economy going forward is to sustain the current levels of growth.

This has proven to be a real test that has served as a good lesson for Kazakhstan. Although the country’s banking and real estate sectors were particularly exposed to the adverse impact of the global turmoil in 2008-9, the national economy has endured these challenges in a resilient manner and managed to remain on a positive growth trajectory, recording GDP growth of 1.2 percent in 2009 and returning to pre-crisis levels of 7.3 percent in 2010 and 7.5 percent in 2011.

Kazakhstan plans to raise its GDP per capita to $15,000, President Nazarbayev told the 4th Astana Economic Forum this year. He said that by 2016, GDP per capita is expected to reach $15,000, compared with the current level of $11,300. Then Kazakhstan will be classified as a “high-income economy,” according to the World Bank.

“Compared to 1994, GDP per capita has increased more than 15 times in less than 20 years, growing from $700 in 1994 to more than $11,000,” Nazarbayev had said.

Since gaining independence, Kazakhstan has achieved positive results in many economic sectors. Over the past decade, its economy has shown steady growth, supported by increased prices on world markets for its export staples of oil, metals and grain. The country is also pushing ahead with developing its renewable energy resources.

Kazakhstan’s climatic conditions are favourable to developing solar and wind energy and its agricultural sector has the potential for the production of biomass energy resources and biofuels. The government has set the goal of generating four percent of its electricity from wind power by 2020. Experts estimate that the use of low quality wheat and of 1.9 million tons of grain that would otherwise be discarded would allow the country to produce one billion liters of bio ethanol a year.

The theme for Astana EXPO in 2017, Future Energy, reflects well the attention this energy rich country wants to focus globally on so called alternative sources of energy.

“Against the background of ongoing economic and social changes, we firmly believe Kazakhstan is well positioned to meet future challenges and opportunities and to deliver on the objectives and targets we have set,” Deputy Prime Minister Kairat Kelimbetov told the forum.

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