Kazakhstan: Economy weakens further in 2016
March 2, 2017
A combination of low crude oil and industrial metals prices and a protracted recession in Russia weighed heavily on economic growth in Kazakhstan last year. However, the economy endured the challenges relatively well with the help of the government, whose response—fiscal support, exchange rate adjustment, domestic liquidity management and structural reform—helped to stabilize conditions.
GDP increased 1.0% in 2016, slowing only marginally from the 1.2% expansion in 2015. Although the GDP data did not include a breakdown by expenditure components, data for the supply side of the economy showed that the economic slowdown in 2016 was primarily the result of a deterioration in the industrial sector in response to a contraction in activity in the extraction sector (both mining and oil extraction) on the heels of low commodity prices. Meanwhile, growth in the manufacturing sector managed to eke out lackluster growth last year, while in construction it was robust thanks to spending in public infrastructure. Looking at the other two main sectors of the economy, growth in agriculture was faster than in 2015, while softened domestic demand prompted growth in services to decelerate in 2016.
Under the flagship 100 Concrete Steps initiative, the government’s efforts are underway to support diversification and broad-based growth, as well as to improve efficiencies in the public sector.
Author: Ricardo Aceves, Senior Economist