Kazakhstan: Growth picks up in January-September
December 30, 2019
Economic growth accelerated to 4.3% in annual terms in January–September, up from the 4.1% year-on-year expansion recorded in January–June, according to an official release by the Statistical Institute.
A comprehensive breakdown revealed that robust domestic activity drove the acceleration in January–September. Private consumption rose at the sharpest rate since January–March 2015 (January–September: +6.0% year-on-year; January–June: +5.9% yoy) as wages picked up on the back of fiscal stimulus, while government consumption eased but remined strong nonetheless (January–September: +10.2% yoy; January–June: +12.5% yoy). In addition, fixed investment growth soared to 12.9% in January–September (January–June: +5.7% yoy), likely amid upbeat FDI stemming from China’s Belt and Road Initiative, of which Kazakhstan is a key partner.
The external sector weighed on overall growth in January–September. Export growth fell to 2.5% (January–June: +4.2% yoy), the slowest expansion since January–June 2017. Imports, on the other hand, soared by 10.8% (January–June: +10.5%), amid rising purchases of capital goods linked to infrastructure projects largely financed by foreign investment.
Growth is set to moderate in 2020, but should remain solid. Planned government reforms, which include income tax breaks, should shore up fixed investment, while private consumption will expand at a healthy pace, despite likely losing steam. Moreover, export growth is seen rising on buoyant oil production, although lingering trade uncertainties remain a downside risk to the outlook.
Author: Nicolás J. Aguilar, Economist