Kazakhstan Economic Outlook
Cumulative GDP growth accelerated in January–December 2022 from Q1–Q3 due to stronger agricultural, construction and services activity. However, industrial growth declined. Turning to Q1 2023, GDP growth should be resilient thanks to a base effect; last January saw major political unrest dent economic activity. Additionally, high-frequency indicators have painted a positive picture: In January, industrial activity rebounded from Q4’s contraction, while retail activity expanded at its highest rate since April 2021. In the same month, oil production reached its highest level since October 2019. Less positively, the services PMI was below the expansionary mark in February and at a 13-month-low, likely because of power outages in the month. This points to dampened private consumption and investment activity in the quarter.
Inflation came in at a more than 25-year high of 21.3% in February (January: 20.7%), moving further above the Central Bank’s 4.0–6.0% target range. Restrictive monetary policy, declining commodity prices and slowing inflation expectations should allow inflation to ease throughout 2023. However, increased government spending and commodity price swings are upside risks.