WOOD Flash – Kazakhstan macro: political revamp proceeding, but country strategy appears unchanged

Over the past month, Kazakhstan has shown a meaningful and quick stabilisation, after the end of the protests that were sparked in early-January, on the surface at least. While the origin and the dynamics of the protests are debatable, our initial take, that the main consequence would be a further consolidation of power around President Tokayev, is proving correct. Going forward, in terms of progress in political reforms, we are now uncertain, albeit skewed on the negative side. Regarding economic reforms, we remain optimistic: the current changes in high “management” positions are proceeding smoothly, somehow (the visibility is very low – there is a visible effort to try to show a united front); and, from President Tokayev’s and his close allies’ side, there is a renewed commitment to the importance of international investors and the reduction of the state’s footprint on the economy. Still, the economy took a hit in early-2022E and, this, together with the announced fiscal stimulus being at the low end of what we were expecting and some additional monetary tightening, is consistent with downside risk for our GDP forecast, from 4.5% to 4.0%.