Kazakhstan: Economy shrinks at sharpest pace since 2009 in January-June
A preliminary estimate released on 14 August revealed the economy contracted 1.8% in the first half of the year, after growing 2.7% in Q1 2020. This result marked the worst performance since Q2 2009 and suggests a sharp decline in GDP in the second quarter.
Data provided by Kazakhstan’s Statistical Institute for H1 revealed a severe slowdown in the service sector (-5.5% year-on-year), which was the main contributor to the decline. In contrast, industrial production expanded 3.2% in H1, mainly driven by robust manufacturing activity. Agricultural production recorded a 2.4% increase in January–June, but only contributed marginally to the reading on account of its low weight in GDP. Notably, the construction sector was robust, growing 11.2% in H1 and helping to cushion the downfall.
Going forward, the economy should remain downbeat as a result of Covid-19 and associated restrictive measures, particularly given the second lockdown which began in early July. On the outlook, Artem Zaigrin, chief economist at SOVA Capital, stated:
“Given the quarantine measures this year, which held back domestic economic activity in 2Q20 and will continue to do so in 3Q20, the economy will likely exhibit negative growth rates until 2Q21, in our view.”