Sep 24, 2013 ... three categories of risk: Economic, Political and Financial System. Risk. •
Kazakhstan, a CRT-4 country, is endowed with natural resources ...
BEST’S COUNTRY RISK REPORT Kazakhstan CRT-4
Country Risk Tier 3 (CRT-3) Moderate Level of Country Risk Country Risk Tier 4 (CRT-4) High Level of Country Risk Country Risk Tier 5 (CRT-5) Very High Level of Country Risk
• Kazakhstan, a CRT-4 country, has moderate levels of economic risk and high levels of political and financial system risk.
Regional Summary: South Central Asia
• Kazakhstan is the world’s leading producer of uranium and holds large fossil fuel reserves. Its economy grew 1.1% in 2016 and forecasts predict it will continue to grow at a modest but stable pace. Concerns about the health of the banking sector and the country’s reliance on exports may be a drag on future growth. Inflation in 2016 was high at 14.6%, but is expected to decline over the short term.
• Economic growth in Central Asia is likely to rise, as improved economic conditions in Russia will have a favorable effect on other Commonwealth of Independent State countries, due to improving trade and growth remittances. • Political power is highly concentrated, and the region suffers from high levels of corruption, a lack of transparency, and regular government interference in the judicial process. A lack of political succession plans in some countries could lead to social unrest and political uncertainty.
Vital Statistics 2016 Nominal GDP Population GDP Per Capita Real GDP Growth Inflation Rate
USD bn mil USD % % United Nations Estimates
Literacy Rate Urbanization Dependency Ratio Life Expectancy Median Age
% % % Years Years Insurance Statistics
Greenland
Finland Sweden Norway Estonia
Isle of Man
Latvia
Denmark
Lithuania
Netherlands
United Kingdom
99.8 53.2 50.3 69.6 Russia 29.3
Belarus Germany
Belgium
Guernsey
Liechtenstein Luxembourg
Jersey
France
Premiums Written (Life) USD mil Premiums Written (Non-Life) USD mil Premiums Growth (2015 - 2016) % Regional Comparison Morocco
Austria
Romania
Croatia
Bulgaria
Montenegro Macedonia Albania
Greece
Portugal
Azores
163 782 Turkey 7.1
Bosnia & Serbia Herzegovina
Italy Monaco
Gibraltar
Canary Islands
Dominican Republic
Cuba
Haiti
Kazakhstan Belarus China India Russia Ukraine
Puerto Rico
St Vincent & the Grenadines St Lucia Barbados Curacao Grenada
Nicaragua
Trinidad & Tobago
Venezuela
Guyana
Colombia
Suriname French Guiana
Ecuador
Mauritania
Antigua & Barbuda Dominica
Costa Rica Panama
(Occupied by Morocco)
British Virgin Islands Anguilla St. Maarten
St Kitts & Nevis
Honduras
Western Sahara
Peru
Malta
Senegal Gambia Guinea-Bissau
Cyprus
Uzbekistan
Syria
Sudan
Pakistan U.A.E.
Yemen
Ethiopia
Somalia
Taiwan Laos
Gabon
Northern Mariana Islands
Hong Kong Macau Vietnam
Thailand
Sri Lanka Malaysia
Wake Island
Philippines
Congo
Brunei
Palau
Federated States of Micronesia Papua New Guinea
Borneo
Kenya
Rwanda Dem. Republic Burundi of Congo
Seychelles
Sumatra
Marshall Islands
Guam
Singapore Uganda
Nauru
New Guinea
Indonesia
Solomon Islands
Angola
Malawi
Source: IMF, UN (2015 figures), Swiss Re, Axco and A.M. Best Namibia
Comoros
Zambia
Bolivia
Zimbabwe
Mozambique
Mauritius Madagascar
Botswana
Australia
Coral Sea Islands
Reunion
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Chile
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Central Africa Republic
Togo
Bhutan
Cambodia
Nigeria
Equatorial Guinea Sao Tome & Principe
Japan
South Korea
Dijbouti
Burkina Faso
Benin
s
nd
la
Is
Qatar
Oman
Eritrea
China Nepal
Kuwait
Saudi Arabia
North Korea
Tajikistan
Afghanistan
Bahrain
Egypt
Mali
Ghana Guinea Sierra Cote d'Ivoire Leone Liberia
Iran
Iraq
Jordan
Chad
ril
Ku
Kyrgyzstan
Azerbaijan
Turkmenistan
Israel
Country Risk Tier Algeria Libya CRT-4 CRT-5 CRT-3 CRT-4 CRT-4 CRT-5
Mongolia
Russia Georgia Armenia
Lebanon
Tunisia
Niger
Cape Verde
Kazakhstan
Republic of Moldova
Hungary
Slovenia
San Marino
Ukraine
Slovakia
Sakhalin
Russia
Poland
Czech Republic
Switzerland
Andorra
Spain
Jamaica
• Countries have had to adjust to lower commodity prices by drawing on available sovereign wealth buffers, implementing fiscal consolidation measures, and cutting fiscal budgets.
National Bank of Kazakhstan
Insurance Regulator
Bahamas
• Given the economic challenges of the last two years, financial sector risks are a concern. The banking sector has been weakened by currency depreciation, an unresolved stock of non-performing legacy loans, and an increasingly dollarized balance sheet. The supervisory and regulatory environment needs to improve.
133.76 17.9 7,453 1.1 14.6
Iceland
Ireland
Cayman Islands
Financial System Risk
Country Risk Tier 2 (CRT-2) Low Level of Country Risk
• The countries pictured hold a great deal of the world’s economic potential.
Belize
Political Risk
Country Risk Tier 1 (CRT-1) Very Low Level of Country Risk
• The Country Risk Tier (CRT) reflects A.M. Best’s assessment of three categories of risk: Economic, Political and Financial System Risk.
es
Guatemala El Salvador
Economic Risk
August 22, 2017 Region: Asia Country Risk Criteria Procedures Guide to Best’s Country Risk Tiers
New Zealand
Kazakhstan BEST’S COUNTRY RISK REPORT
Economic Risk: Moderate
Economic Growth (%) 20 Real GDP
18
• The country is heavily dependent on the oil sector, which accounts for approximately 15% of GDP, 50% of exports, and 35% of fiscal revenue. The dependence on commodities exposes the country to significant levels of volatility.
CPI Inflation
16 14 12
• In an effort to diversify the economy, the government is targeting improvements in the telecommunications, pharmaceuticals, and food processing industries for investment and further development.
10 8 6
• Economic growth has been supported by fiscal spending through the “Nurly Zhol” initiative, which has allocated resources (estimated at 7% of GDP) to housing, small and medium-sized enterprises, and infrastructure projects.
4 2 0
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Source: IMF World Economic Outlook and A.M. Best
• The government is undertaking an “economic modernization” program aimed at increasing privatization. An estimated 60% of firms are still under state control.
Political Risk: High
Political Risk Summary Score 1 (best) to 5 (worst) World Average Kazakhstan
• The centralized political system is stable, but there are increasing concerns over succession. The current president has been in office since 1991. Recent legislation shifted executive powers from the president to the cabinet and parliament, but some critics consider these changes superficial.
International Transactions Policy
5 4
Legal System
Monetary Policy
3 2 1
Regional Stability
• The power of the government is tightly controlled by the president and his allies, which can limit institutional effectiveness and governance. The president is the supreme arbiter disputes among the various institutions of government.
Fiscal Policy
0
Social Stability
Business Environment
Government Stability
• The prolonged low oil price environment has exacerbated social and economic disparities, and could increase antigovernment protests.
Labor Flexibility
• To attract foreign investment, the government is trying to improve the operating environment, but significant progress will be needed. The country suffers from a lack of transparency, high levels of corruption, and an increase in terrorism.
Source: A.M. Best
GDP Per Capita and Population GDP Per Capita
10,000
Population
Financial System Risk: High
1600
9,000
• The insurance industry is regulated by the Committee for the Control and Supervision of the Financial Market and Financial Obligations, part of the National Bank of Kazakhstan.
1400
8,000 1200 7,000 1000 800
5,000 4,000
600
3,000 400 2,000 200
1,000 0
Kazakhstan
Belarus
China
India
Russia
Ukraine
0
Millions
USD
6,000
• Bad legacy loans remain a drag on the country’s economic growth and potential. The government had to revise its 2017 budget, to recapitalize its distressed asset fund at a cost of approximately 4% of GDP. It is widely believed the government will likely have to provide more financial assistance in the future. • The currency devaluation in late 2015-early 2016 triggered an increase in prices, but recent inflation levels are in line with the National Bank’s targeted range of 6%-8%.
Source: IMF and A.M. Best
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