Kazakhstan: Economy loses momentum in first quarter of the year
May 20, 2019
Economic growth declined to 3.8% in annual terms in January–March, from the 4.1% year-on-year expansion recorded in January–December 2018, according to a preliminary estimate released on 20 May.
A breakdown of key sectors revealed that industry grew at a notably softer pace of 3.2% in January–March, down from 4.2% in January–December 2018. Faltering manufacturing activity amid a global slowdown, along with a swing to contraction in the supply of electricity, gas, steam and air conditioning, were behind the weakening. Moreover, services also lost steam on reduced growth in wholesale and retail trade; lower sales of cars; and a loss of traction in information and communication, financial and insurance activities; and the real estate sector. Growth of services slipped to 3.7% in the three-month period from 4.0% in the previous 12-month period.
On the upside, construction activity accelerated sharply to 8.9% in January–March, from 4.1% in January–December last year. Meanwhile, favorable weather conditions buoyed agricultural production, which grew 3.6% in the first three months, following a 3.4% upturn in the previous 12-month period.
Growth is set to decline this year, as overhauls at the Kashagan, Karachaganak and Tengiz oil fields curb petroleum production. This, in turn, will weigh on industrial activity and export growth, which will likely be further hit by a challenging global trading environment. That said, the economy should expand at a resilient stride as the fiscal stimulus package buttresses private consumption and investment.
Author: Nihad Ahmed, Economist