Tuesday, 10 November 2020, 11:25:26
At a government session chaired by Prime Minister Askar Mamin, the results of the country's socio-economic development and the execution of the republican budget for January-October 2020 were considered. Chair of the National Bank Erbolat Dossaev reported on the state of the banking sector.
Uncertainty and volatility in world stock markets in October 2020 increased amid a sharp increase in the number of cases of coronavirus infection in the world and the US presidential election.
At the end of October, American stock markets closed with negative values. Stocks in Europe showed the strongest drop since March 2020. Investors are worried that quarantine measures could push the eurozone economy into a double recession.
According to Dossaev, the uncertainty about the results of the presidential elections in the United States, which in October led to the rise in the US dollar and the weakening of the currencies of developing countries, decreased at the end of last week against the background of the victory of the candidate from the Democratic Party, Joe Biden. This news, as well as the alleged lack of control over the Senate by the Democratic Party, were received positively by the market, given the possibility of agreeing on a new program to help the economy.
“At the end of October, there was a drop in commodity markets against the background of discussions on the introduction of lockdowns in France and Germany. Overall, Europe accounts for 20% of world oil consumption. If other European countries join France and Germany in November and December, oil production may again exceed demand. This will put pressure on OPEC and plans to increase production from January 2021 may be revised,” Dossaev said.
A significant increase in the incidence of coronavirus in the EU countries came by the end of October, followed by the adoption of restrictive measures in November 2020. In this regard, a decrease in economic activity is expected in November.
“In Kazakhstan, the business activity index for October 2020 rose from 47.6 to 48.8 due to growth in industry and services. In construction, the indicator fell by 1.5 points to 47.6,” the head of the National Bank said.
In October 2020, annual inflation rose to 7.1% from 7% a month earlier. The annual growth in prices for food products slowed slightly from 10.8% to 10.7%, while prices for non-food products increased from 5.5% to 5.6% and paid services — from 3.6% to 3.7%.
A slight acceleration of inflation is observed against the background of rising prices for non-durable goods and renewed growth in utility tariffs.
Against the background of increased uncertainty both in the domestic and foreign markets, on Oct. 26, 2020, the base rate was kept at 9% with an interest rate corridor of +/- 1.5 pp.
Uncertainty in the external sector and growing volatility put pressure on risky assets and currencies of developing countries.
1. Oil by the end of October dropped significantly to $37.5 per barrel as a result of the increased likelihood of introducing repeated quarantine measures, which implies a weakening in oil demand. Over the month, the decline was 8.5%.
Since the beginning of this month, oil prices have begun to gradually rise in anticipation of the OPEC + meeting on December 30 of this year, at which it is expected to consider the possibility of extending the restrictions or additional cuts. On the back of positive news about successful vaccine trials from Pfizer and BioNTech, oil quotes rose to $42.4 per barrel, increasing by 7.5% on the day.
2. The entry of the world economy into a new phase of the crisis and high uncertainty in foreign markets led to an increase in the US dollar index, which affected the value of gold and currencies of developing countries.
Against the backdrop of a decline in the dollar index and clarification of the situation with the presidential elections in the United States, gold on November 9 of this year fell 0.8% to $ 1863 an ounce.
As Dossaev noted, the currencies of developing countries in October this year. continued to weaken amid the realization of the risk of a second wave of coronavirus in the United States and a number of European countries. Thus, the Turkish lira weakened over the month by 8%, the Russian ruble — by 2.2%, the Brazilian real — by 2.3%.
The exchange rate based on the results of trading on the stock exchange on Nov. 9, 2020, amounted to 431.17 tenge per US dollar, having strengthened since the beginning of the month by 0.3%.
In the third quarter of 2020, according to preliminary data, for the first time since 1999, the trade balance was negative at the level of (-) 1.0 billion US dollars according to the NBRK's balance of payments methodology.
As a result, over 9 months of 2020, the trade surplus decreased by 35% to $9.1 billion. Exports of goods decreased by 18.4%, which is associated with a drop in exports of oil and gas condensate.
Imports of goods decreased by 10.4% as a result of a decrease in the import of investment goods by 12.6% and intermediate goods by 12.6%.
The gold and foreign exchange reserves of the National Bank, according to preliminary data, in October decreased by $200 million to $33.6 billion, mainly due to the payment of government debt and interventions.
Despite the negative adjustment in October, investment income since the beginning of 2020 amounted to about $950 million.
International reserves of Kazakhstan at the end of October 2020, according to preliminary data, amounted to $89.9 billion, having decreased by 1.3% over the month.
Deposits in the banking system at the end of September 2020 amounted to 21.4 trillion tenge, an increase of 3.3% over the month.
Tenge deposits in September increased by 2.2% to 12.6 trillion tenge, foreign currency deposits – by 5.1%.
As a result, the level of dollarization of deposits in September 2020 formed at the level of 40.9%.
The business loan portfolio in September increased by 0.2% to 7.3 trillion tenge. The rate on tenge loans to businesses amounted to 12.1% in September of this year, incl. for short-term loans – 11.8%, for long-term loans – 13.3% in September 2020.
Loans of the population in September increased by 2% to 7 trillion tenge. In their structure, consumer loans increased by 1.3% to 4.2 trillion tenge, mortgage loans increased by 3.6% to 2.1 trillion tenge due to the implementation of state programs.
To support the Kazakh economy, the implementation of the anti-crisis initiatives of the Head of State continues.
- According to the Economy of Simple Things, as of Nov. 6, 2020, entrepreneurs received 1,277 applications for 872.7 billion tenge, of which banks approved 487 applications for a total amount of 447.6 billion tenge, issued 691 loans for 427.9 billion tenge.
- According to the Program of Concessional Lending to business entities, as of Nov. 6, 2020, entrepreneurs filed 2,291 applications in the amount of 567.3 billion tenge, 4,292 applications for 444.8 billion tenge were issued, of which 91 billion tenge due to money received from the repayment of previously issued loans.
Support for housing construction continues with funding from the National Bank.
- According to the program 7-20-25, on Nov. 5, 2020, 25,186 applications for 295.3 billion tenge were approved, of which 19,891 loans were issued for 232.1 billion tenge.
- According to the market mortgage program Baspana Hit for Nov. 5, 2020, 45,866 applications were approved for 404.5 billion tenge, 37,176 loans were issued for 320.6 billion tenge.