Kazakhstan: GDP expands for first time in over a year in H1 amid a favorable base effect
According to a preliminary reading, GDP expanded 2.3% year-on-year in the January–June period, rebounding from the 1.4% contraction recorded in Q1. H1’s reading was the best since Q1 2020, albeit largely flattered by a favorable base effect.
Looking at the details, the services sector—accounting for roughly 50% of GDP in H1—led the uptick, growing 1.7% (Q1: -3.2% yoy), amid buoyant trade and improving dynamics in the transportation sector. Meanwhile, the industrial sector grew 1.3%, up from Q1’s 0.1% expansion, mainly due to a less pronounced fall in mining and quarrying output, as manufacturing lost steam. Lastly, the construction sector remained solid, albeit growing at a slower pace of 11.9% (2020: +13.1%).
Moving forward to Q3, GDP should keep benefiting from a favorable base effect, with the short-term economic indicator putting economic growth from January–July at 3.7%. Some headwinds may stem from tighter monetary policy, however.
Commenting on the outlook for Q3, Artem Zaigrin, chief economist at SOVA Capital, said:
“The country has returned to the red zone due to the dramatic spike in cases in July-August. Despite the outbreak of the Delta strain, Kazakhstan’s economic recovery has gained pace […]. The withdrawal of pension savings has supported the pickup in loan growth.”