Kazakhstan: Economy picks up slightly in the second quarter
A detailed breakdown of GDP by production shows that the economy continued to grow at a strong rate in the second quarter. GDP expanded 4.2% year-on-year in the January–June period, revised slightly up from the preliminary estimate’s 4.1% expansion and marginally higher than the 4.1% growth recorded in the January–March period.
While a breakdown by expenditure has yet to be released, a breakdown by production shows that all but one of the sub-sectors saw an expansion in the January–June period. Overall, growth in the production of goods lost steam again, moderating to 5.0% in the six-month period, down from 5.4% in the three-month period. Mining and quarrying output rose at the fastest pace, while water supply; sewerage system, waste management and control contracted. On the other hand, overall growth in production of services picked up slightly. It grew 3.8% in the six-month period compared to 3.7% in the three-month period, thanks to an upturn across all the sub-sectors in this category, including: wholesale and retail trade, information and communications, transport and storage. The strong growth in retail sales suggests continued solid expansion in private consumption.
Higher oil prices, combined with a rise in investment in the oil sector and increased exports, should continue to drive the economy and yield another year of robust economic growth. Downside risks to the outlook include escalating trade tensions and the Federal Reserve’s move to normalize monetary policy, which will likely put further downward pressure on the tenge. Kazakhstan’s drawn-out implementation of structural reforms and persistent weaknesses in the banking sector also pose risks to the economy’s growth prospects.