Kazakhstan: Economic growth slows in the second quarter
According to a preliminary estimate, the Kazakh economy lost further steam in the second quarter, as GDP growth moderated to 3.2% year on year in January–June (January–March: +3.8% yoy).
From a production point of view, the slowdown largely reflected weaker momentum in the industrial sector: Water supply output swung into contraction, mining and quarrying growth ground to a near halt, and manufacturing and construction lost momentum. That said, the services sector rose at a faster clip thanks to improvements in domestic trade, hospitality, real estate plus financial and insurance activities, limiting the overall deceleration. In addition, the agricultural sector gained some steam.
Absent a breakdown by expenditure, rebounding real wages, paired with ongoing monetary policy loosening, likely boosted domestic demand. On the external front, merchandise exports bounced back and posted the best reading in one-and-a-half years in Q2, suggesting a recovery in that sector.
A complete breakdown will be released on 11 October.
Our panelists expect the economy to be picking up pace in the third quarter, following an uninspiring performance in H1. In particular, ongoing disinflation will add support to household purchasing power, while robust oil output and gold demand will continue to drive a recovery in exports. However, our Consensus is for the economy to lose steam in 2024 as a whole from 2023 and miss the government’s 6.0% target.
Analysts at the EIU commented:
“We forecast full-year growth of 4% in 2024, within the NBK’s target range of 3.5-4.5%, but slowing from 5.1% in 2023. Growth will be supported by strong capital investment and firm growth in the industrial and construction sectors. Growing oil production, coupled with easing inflation supporting private consumption, and the continuation of monetary loosening, which began in August 2023, will also buttress growth. The off-balance-sheet re-exporting of sanctioned goods to Russia will ensure a strong export performance.”