Kazakhstan’s GDP grew by 5.3% in the first quarter of 2008, Economy and Budget Planning Minister Bakhyt Sultanov has said.

This is within the 5-7% corridor set for GDP growth by the Kazakh government.

Inflation was 2.5% in January-March 2008, which is 0.1 percentage points lower than in the same period of last year.

Mr Sultanov said that the situation in the financial sector had stabilized in the first quarter of the year. Commercial banks increased loans to the economy by 44% year on year in the given period despite tightened conditions for banks to obtain foreign loans and payments on loans obtained earlier.

Earlier the government pledged $4bn to Kazakh commercial banks to continue loaning the construction sector and other sectors of the economy. Deposits held by residents in banks went up by over 2% in the given period.

Both Mr Sultanov and Prime Minister Karim Massimov seem to be very satisfied with the performance of the country’s economy in the first quarter because it was in line with the government’s expectations.

The government hopes that the liquidity crisis will help make the Kazakh economy be more balanced – diversify the economy, overcome reliance on the extractive sectors, bring down inflation and stabilize the exchange rate - fearing that it has already become overheated.