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UPDATE 3-Kazakh economy to slow as price of key exports falls

Published 01/20/2009, 12:40 AM

(Adds oil and metals production outlook)

ASTANA, Jan 20 (Reuters) - Kazakhstan's economic growth will slow to 2 percent this year from 3.1 percent last year, while inflation will ease, Economy Minister Bakhyt Sultanov said, as the country grapples with falling prices of key exports.

Sultanov, who presented a joint statement of the government and the central bank on economic policies, said unemployment would rise to 8 percent this year from 7 percent in 2008.

"Inflation is projected at 9.0 percent," he told a government meeting on Tuesday. Inflation stood at 9.5 percent in 2008.

Kazakhstan has been hit hard by the global financial crisis and the decline in the price of oil and metals, its key exports.

Sultanov said 2009 oil output would still grow from last year's 70.6 million tonnes, to between 76 million and 79 million.

"We take into account the possibility of that volume being cut by 3 million tonnes as production at some fields may be cut for profitability reasons if oil price falls below $40 per barrel," he told reporters after the meeting.

Metals output could shrink by up to 1 percent this year, Sultanov said.

The government has earlier projected economic growth of 1 to 3 percent in 2009.

The International Monetary Fund (IMF) said last week it expected the country's economy to grow just 1.0 percent this year after expanding about 10 percent annually between 2000 and 2007.

The government has announced a $21 billion economic rescue package that includes capital for large banks, loans to key industries and small businesses and a bailout for troubled building firms.

Analysts, like the IMF, have praised the program but said it needs to be implemented swiftly in order to have the desired effect on the economy. (Reporting by Raushan Nurshayeva; Writing by Olzhas Auyezov; Editing by Jan Dahinten)

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