Kazakhstan: Growth edges down in the third quarter
A detailed breakdown of GDP by expenditure confirmed that the economy lost some steam in the second half of the year, growing 4.1% year-on-year in January–September, following a 4.2% expansion in January–June. Buoyant oil production, coupled with strong oil prices, have kept the economy growing at a robust pace.
On the domestic side, demand remained stable in the third quarter. Overall domestic demand dropped 3.8% over the same period of the previous year in January–September, matching the reading seen throughout January–June. Private consumption accelerated, growing 5.1% in the nine-month period compared to 4.5% in the first half of the year. Moderating inflationary pressures boosted households’ purchasing power and likely spurred an increase in private spending. Moreover, public spending continued to fall in January–September from the January–June as the government kept up its fiscal consolidation efforts, although the rate of contraction eased. Improvements in these two sub-components offset a downturn in fixed investment growth, which declined to 4.6% in the nine-month period from the 5.3% recorded in the first six months.
The external sector, however, made a smaller contribution to growth in January–September compared to January–June. While export growth remained stable in the nine months at 8.9%, imports accelerated from the first six months, growing 3.7% in January–September, following a 2.7% expansion in January–June.
This year, growth is expected to lose ground on a loss of momentum in the energy sector. Improving activity in the non-oil sector—thanks to ongoing structural reforms—should continue to support the economy, however. Downside risks continue to stem from global trade tensions and the Federal Reserve’s move to normalize monetary policy, which will likely put further downward pressure on the tenge.