ALMATY, Aug 15 (Reuter) - Kazakhstan has stopped a collapse
in output and brought inflation down but its economy is still
depressed and shaky, a government official said on Thursday.
Official figures published Thursday showed gross domestic
product, the broadest measure of a country's economy, was 0.1
percent higher in the first seven months of this year than a
year earlier.
``The situation is contradictory... The fall in output has
been reversed, but the economy is still stagnant,'' Trek
Begakhmetov, deputy head of the prime minister's office, told a
news conference.
``The growth of GDP was largely due to the revival of the
country's important industry and commerce, which grew
respectively by 0.2 and 12.9 percent,'' he said.
But the steep recession in machine-building, metallurgy,
chemical and petrochemical industries, as well as in the
country's backward agriculture, has not yet been overcome.
Kazakhstan's economy has shrunk by over half since
independence in 1991.
But Begakhmetov said the government expected growth in GDP
this year. The authorities have previously set GDP growth
targets of 0.4 percent this year, 0.9 percent in 1997 and 2.8
percent in 1998. GDP fell by 8.9 percent last year.
Inflation dropped to 1.8 percent in July from 2.5 percent in
June. Consumer prices, which grew by 18.9 percent in the first
seven months of the year, have not risen so far in August.
The government had planned to slash this year's inflation to
25.9 percent from 60.9 percent in 1995, but Begakhmetov said
30-40 percent would be more realistic.
Despite the first positive signs, economic growth is being
held back by a crippling non-payments crisis.
Mutual debts in the economy exceed $17 billion, and
Begakhmetov said the government is preparing a set of drastic
measures to be applied after August 20 to improve the situation.
Scarce foreign investment in this resource-rich former
Soviet republic is another obstacle for a long-awaited economic
revival.
Since independence in late 1991, foreign companies have
expressed intentions to invest over $40 billion in Kazakhstan,
mostly in the oil sector, he said.
But so far the oil industry has received just over $2
billion of direct foreign investment.
``We expect the situation to improve soon... Parliament is
likely to pass a law, according to which foreign investors will
not have to pay taxes in the first 5-7 years of their activity
in Kazakhstan,'' Begakhmetov said.
--Almaty Newsroom, +7 3272 509410


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