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Kazakhstan Infrastructure Report Q3 2009
Market |
Construction |
Report Type |
Market Research |
Country |
Kazakhstan |
Published |
2 July 2009 |
Number of Pages |
78 |
Download |
|
Immediate |
|
Publisher |
Business Monitor International |
Kazakhstan's infrastructure sector is forecast to contract by 1.28% to total US$11.8bn in 2009
Infrastructure spending, which has felt the strain of the slowdown, will continue to feel it in 2009. The government’s willingness to plough money into the economy, and some big loans from foreign lenders and multilateral institutions for major projects, will soften but not eliminate the pain.
In the Q309 Kazakhstan Infrastructure Report we forecast that construction industry value will contract by 1.28% to reach a value of KZT1.59trn (US$11.8bn) in 2009. This is based on a revised and updated set of data from the national statistics agency. The high inflation that has plagued the economy is seen subsiding in 2009, though at 4.4% it still pushes industry value real growth to -1.2% (nominal growth is 3%).
The report now forecasts GDP in 2009 to contract 1.9% after an estimated 3.0% growth in 2008. Our forecast is for the economy to resume its expansion in 2010, at a rate of 2.4%, and then accelerate to 5.5% growth in 2011.
For many years Kazakhstan represented something of an infrastructural bonanza. Kazakhstan is a sparsely populated, increasingly wealthy, landlocked country, which has a government committed to developing road links to countries that provide access to major export markets. Kazakhstan is a crucial part of the Silk Road terrestrial trading routes between the Asia-Pacific region (China especially) and Europe (Russia especially). The crucial hydrocarbons industry needs substantial new investment if production and exports are to increase as planned. Further, the USSR-era has left Kazakhstan with a curious legacy: the need to import electricity and gas to supply the major cities in the south and the southeast of the country, including Almaty, which is the former capital and still by far the most populous city in Kazakhstan. The government has a vested interest in promoting pipelines and power distribution networks that will enable Kazakhstan to meet its requirements with locally produced energy.
For most developing countries, growth and foreign investment depends on solid governance, improving transparency and a reduction in political/policy risk. Kazakhstan has been in an unusual position where its low ranking in many surveys of transparency and governance has not deterred investments.
The China National Petroleum Corp.’s joint venture with KazMunaiGaz to buy Kazakhstan-based MangistauMunaiGaz from Indonesia's Central Asia Petroleum shows the appetite for the country’s resources. The Associated Press said CNPC will own half of MangistauMunaiGaz, but it was not clear whether the US$5bn loan to KazMunaiGaz was the entire cost to China.
State-owned Kazakhstan Development Bank, together with the World Bank and the European Bank for Reconstruction and Development, has financed the development of Kazakhstan’s electricity infrastructure. State-owned energy company KazMunaiGaz’s annual capital expenditure – which generally can be thought of its contribution to infrastructure development in the country – amounts to more than US$2bn annually. This report includes a lengthy profile of this important company.
The global financial crisis has forced the government to nationalise several of the largest banks. For the time being, the country’s real estate developers are finding it hard – or impossible – to access the funding they need. Construction in Almaty and Astana has – at least temporarily – ground to a halt.
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