Nazarbayev Not Concerned by Slowdown

ASTANA, Kazakhstan -- Kazakhstan's economy is not threatened by a global credit crunch and a construction slowdown may put growth on a more sustainable path, President Nursultan Nazarbayev said Thursday.

"Our real estate sector has been overheating in the past few years. A square meter fetched a sky-high price, credit was cheap and everyone was buying and building," he said.

"Prices rose to the point where if [a crisis] did not happen this year, it would have happened next year ... So this had a positive, sobering aspect," he told his country's Security Council.

Kazakh banks that have borrowed heavily abroad have found it difficult to roll over debts since a global credit squeeze took hold in August, forcing them to rein in borrowing in the construction sector, slowing activity.

However, Nazarbayev said, "Overall, there is no danger to our economy, because we have built up reserves to deal with such an eventuality."

Nazarbayev ordered his government to work more effectively to restrain inflation and meet budget targets. The government has promised $4 billion to its banks, particularly to those investing in construction, $1 billion of which must go to them by the end of this year.