Doubled inspiration

This statement has sounded quite optimistic, but another statement by the Ministry of Economy and Budget Planning is even more courageous: the GNP may be doubled by the end of 2007 already.

It means that the economic growth record declared by the president is not a limit yet.

There is an economic growth in the country in the last five years. The growth of total GNP in 2000-2003 was 49.4 per cent, 57 per cent - in the industry, 17.8 per cent in the agriculture, 95 per cent in the construction. Kazakhstan is the world leader in the speed of economic growth - 10.6 per cent.

However this growth can be characterised as extensive, because its high speed has become possible in the first place due to the developing extraction and transportation of oil and gas to the world market.

And although the potentialities have not been exhausted here - 51 million tons of oil were produced last year, with this figure expected to triple by 2015 - nevertheless, the forecasts on GNP growth are based first of all on the industrial innovation strategy, which was commissioned last year. Its main purpose is to stimulate development in the non-extracting sector of the export-oriented production on the basis of new scientific achievements. Wholesale production systems will be created in the country - the so called clusters, i.e. ventures with multiple specialisations, producing readymade competitive commodities.

Development institutions have already been created in the country - such as, the Development Bank, the Innovation and Investment Funds, which credit investment projects, modernisation and technical equipment of the processing areas. The state has even started to lower interest rates for crediting lowly profitable or long term investment projects - this is why credit resources of the Development Bank are replenished from the budget.

The investments in the industrial and extraction areas are encouraged in the country by means of a relief from the corporate income tax. Special taxation conditions have been created during the operations of petrochemical facilities in exchange for introduction of high technologies. The state seeks to attract investors to implementation of big and efficient investment projects sharing the risks in their implementation (although the state share will not exceed 20 per cent). Thus, the state on the one hand stimulated opening of new production facilities, on the other hand - such policy maintains the existing private sector share on the market. Currently, according to official data, around 80 per cent of the gross national product are created exactly in the private sector of the economy.

According to a moderate plan of the Ministry of Economy announced last May, the economic development in 2004-2007 is forecasted with an average 8.1 per cent growth of the GNP. In 2007 the nominal GNP index per head according to the current tenge rate against US dollar will be 3.9 thousand dollars against 2 thousand dollars in 2002, or a growth by 1.9 times.

The implementation of state economic policy in 2007, in comparison with 2002, will be characterised by the following figures: the real GNP will grow by 49 per cent, the inflation will not exceed 4-6 per cent per annum, investments in the fixed capital must grow by 78 per cent, the industrial production volume - by 48 per cent, the real salary rate - by 30 per cent.

However, the successful conjuncture allows the Ministry of Economy to revise its forecasts today making them more optimistic. Thus, last Thursday the vice minister Kairat Abuseitov declared that a task of doubling GNP against the GNP 2000 could be fulfilled not in 2010, as it was planned, but already by the end of 2007 - beginning of 2008. It will be promoted according to him by "a favourable situation in the economy, a strengthened national currency, a stable growth of production results." Thus, the GNP will grow from 5.138 billion tenge in 2004 to 7.557 billion in 2007. Moreover, the GNP per head will have the following dynamics: in 2005 - 2.94 thousand USD, in 2006 - 3.37, in 2007 - 3.85 thousand USD. And after 11 years the country plans to produce its GNP, according to forecasts by the head of state, in the amount of 8 thousand USD, or on the level of such countries as South Korea and Saudi Arabia.

Prospects are very promising, but today only optimistic factors are taken into account, because the current state of economy allows us to hope that it will continue in this vein. However, is it a positive factor that the national currency is strengthening? Hardly likely. And not even because many exporters receive lesser profits for the same export volumes when they are converted into tenge, even after a growth of prices on the world market. In this context we would like to review another aspect: today the strengthening national currency adds but some tenths to the GNP growth. But the situation on the world market will change sooner or later (the cycle of the USD fall, according to some forecasts, must end already on the threshold between 2005-2006), and then a growth founded on the currency factor among other things, will slow down significantly. Besides, we will not obtain such solid additions to the GNP growth per head.

If only one currency aspect of the GNP will appear so movable, then, of course, there will be no disaster. But if other associate factors start exerting pressure on this figure, the today plans will be a failure. For sure there will be some growth - the locomotive is already moving headlong, - but it will not be so impressive.

The main thing in this situation is to hold to the policy. Today the technological reconstruction of the economy looks like the best option, although it does seem to be something unnatural - will we be able to reorient the economy in such historically brief terms?

Therefore the political will that will not allow to deviate from the chosen course is so important. Then any task will become possible to be fulfilled.