Dashboard for assessing current economic activity (04/06/2023)
According to the dashboard results for December, 21 out of 30 factors show an overheating of the economy. The analysis was carried out in 4 blocks: inflation, monetary, economic and external conditions. A semantic analysis of the National Bank of the Republic of Kazakhstan press release was also carried out.
Thus,2 indicators in the monetary conditions block and 1 indicator in the economic environment block have crossed the overheating zone compared to the previous dashboard. We also note an improvement in business activity while reducing the increase in consumer prices in March. Inflation rates fell due to the technical effect of a high base, without identifying other fundamental factors that could have a disinflationary effect. At the same time, the risks of inflationary environment deterioration have significantly increased that are related to the allocation of additional funds to support business activity, which for the most part causes excessive demand, as well as imbalances accumulated over the years of administrative restrictions in the housing and utility services and fuel market.
So, in terms of growing business activity, prolonged geopolitical risk, mini-crises in the US and EU banking systems and the deterioration of prerequisites for the inflationary processes, the regulator will continue its hawkish policy till the middle of the year, which determines our expectations for maintaining the base rate at the same level at the upcoming meeting – 16.75%.
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