Kazakhstan: GDP growth softens in Q3
According to a preliminary reading, GDP growth weakened to 2.8% year on year in January–September, down from 3.6% in January–June. The cumulative reading means the economy slowed in Q3 compared to H1, and was driven by softer expansions in industrial production and services activity amid the fallout from the Russia-Ukraine war.
Industrial growth decelerated to 2.1% in January–September compared to 3.5% in the first six months of the year. Mining and quarrying output contracted due to declines in oil exports amid repair works in the Kashagan oil field—the largest in the country.
Services growth also decelerated, coming in at 2.0% in January–September compared to 2.6% in the first six months of the year. In particular, wholesale and retail trade expanded at a weaker rate. Domestic demand was likely affected by elevated price pressures—inflation reached its highest average in six years in the quarter—and soaring interest rates.
More positively, agricultural output expanded at a sharper pace, to 6.9% from 1.4%. In addition to buttressing GDP activity, elevated agricultural production is likely to reduce domestic food inflation in the near future.
A breakdown by expenditure is not yet available. However, higher prices for oil and gas—Kazakhstan’s key exports—likely softened the slowdown in Central Asia’s largest economy by supporting government coffers and thus government spending.
Looking at the short-term outlook, GDP growth should remain roughly stable before picking up in H2 2023 as demand recovers in China and the E.U—key trading partners—supporting external demand for Kazakh exports. Eventual declines in inflation and interest rates should further support growth in H2 2023.