The Asian Development Bank (ADB) increased its economic growth forecast for the countries of Central Asia this year as the outlook for Kazakhstan improved.

The growth forecast for the region was increased to 3.6 percent in 2021 from a previous projection of 3.4 percent. The bank said that Kazakhstan’s forecast for this year was adjusted upwards to 3.4 percent from 3.2 percent.

The bank said that the new forecast also reflected an improved outlook for Armenia and Georgia.

ADB’s previous outlook was published in April when the bank said that countries of the South Caucasus and Central Asia would get back to growth this year, along with other world economies, after suffering economic contraction caused by the impact of the COVID-19 pandemic.

While Kazakhstan’s gross domestic product (GDP) grew by only 1.6 percent year-on-year in January to May 2021, consumer spending showed a marked recovery as retail turnover expanded by 6.2 percent in January to April, the ADB said in a report.

Machinery, building materials, light industry, and construction rose by 7.2 percent, and investment outside of the country’s large extractive industry jumped by 25.5 percent in the first five months. In the first quarter, real household income per capita grew by 3.4 percent on higher salaries and government spending on pensions and scholarships.

In May, the government announced additional fiscal support for economic recovery programmes.

“Factors likely to support growth in the coming months are the lifting of pandemic restrictions, higher oil prices, and the relaxation of OPEC+ oil production cuts agreed by the Organisation of the Petroleum Exporting Countries (OPEC) and its partners,” the ADB said.

Kazakhstan will increase oil production to 1.491 million barrels per day (bpd) from August, adding 16,000 barrels every month as OPEC+ participants agreed on a gradual rise in oil output, ending discussions that lasted around three weeks due to a confrontation between the UAE and Saudi Arabia.

As the COVID-19 pandemic disrupted production as well as demand for oil, OPEC+, a group of OPEC countries and allied producers of which ex-Soviet Kazakhstan is a member, cut output by a little more than 7 million bpd to support prices and reduce oversupply. Earlier this year, members of the group agreed to ease cuts gradually by 350,000 bpd in May, another 350,000 bpd in June and around 450,000 bpd in July.

The cartel has now decided to increase production by a cumulative 400,000 bpd every month starting in August until it reaches the same production levels seen at the end of 2019.

The ADB said that Kazakhstan’s 2022 growth forecast would stay at 3.5 percent.

“As the outlook next year for the other subregional economies is also unchanged, the subregional growth projection for 2022 is sustained at 4.0 percent,” the bank said.

The bank did not provide a new forecast for the South Caucasus countries but noted that Armenia’s economic activity index (a GDP proxy used by the statistics committee) rose by 4.3 percent year-on-year in January–May 2021.

The South Caucasus country’s industry increased by 2.3 percent, construction by 14.3 percent, trade by 7.4 percent in the first five months of 2021.

Growth has also picked up in Georgia, reaching 8.1 percent in the first four months of 2021 after April saw a very steep rise by 44.8 percent year-on-year. Large companies reported turnover in April soaring by 93.4 percent, supported by fiscal stimulus, the ADB said.