Kazakhstan: Economy shows signs of recovery in H2
November 14, 2016
Kazakhstan’s economy is showing gradual signs of an incipient recovery. A preliminary estimate showed that GDP—on a production basis—increased 0.4% in the January–September period from the same period last year. The result fared slightly better than the 0.3% rise the markets had expected and followed a mild 0.1% increase recorded in the first half. Kazakhstan reports growth on an accumulated basis and in the full year 2015 overall economic growth was 1.2% (2014: +4.1 year-on-year).
The stronger GDP growth rate seen in the nine-month period was mainly the result of a solid increase in the construction sector, which expanded 6.9% year-on-year in January–September. Construction has been supported mainly by strong public investment in infrastructure. Agriculture was reported to have grown 4.9% in the nine-month period up to September, which marks the strongest growth rate in the sector since 2013. Moreover, preliminary data also showed that the services sector appeared to have recovered between January and September. It grew 0.4% annually in the period, suggesting that domestic demand, particularly household spending, is improving.
The government maintained its growth projection of 0.5% for this year and expects economic activity to pick up momentum next year and expand 1.9% in 2017 and 2.1% in 2018. The economy is expected to be supported by a recovery in oil production due to the upcoming opening of the Kashagan oil field in Q4. Kazakh officials expect Kashagan only will produce about 150 thousand barrels a day in 2017. Also, a government stimulus program announced earlier this year will continue to support investment and the construction sector, helping to offset low bank lending.
Author: Ricardo Aceves, Senior Economist