Kazakhstan: Economy maintains a strong pace of expansion in Q4 2018
February 15, 2019
The latest national accounts data revealed that the economy sustained a robust pace of expansion in the final quarter of last year, thanks to a buoyant oil sector and solid non-oil activities. GDP expanded 4.1% in 2018, matching the pace of expansion of the January–September period.
While a breakdown by expenditure has yet to be released, a breakdown by production revealed that growth in the year reflected healthy industrial, agricultural and services sectors. Industrial output grew 4.2% in the 12-month period, although moderated from a 4.8% expansion in January–September amid slowing global growth. Construction activity also remained buoyant until the end of the year, but also lost some steam (January–December: +4.1% year-on-year; January–September: +4.4% yoy). On the other hand, agricultural output picked up at the end of the year, likely owing to more favorable weather conditions, expanding 3.4% in January–December (January–September: +2.0% yoy). The services sector also gained some pace, growing 4.0% in the year following growth of 3.8% in the previous nine-month period, mainly reflecting a surge in wholesale and retail trade owing to the holiday season.
Robust oil production and resilient domestic demand dynamics should support a healthy pace of expansion this year. Downside risks stem from lower oil prices, a persistent slowdown in global growth, and an escalation in trade tensions. Moreover, the possibility of early presidential elections and the likely end of President Nazarbayev’s three-decade reign raise uncertainties over the transition of power and implications for the longer-term outlook on economic policymaking.