Kazakhstan: GDP records best reading since Q1 2020 in Q1
According to a preliminary reading, GDP contracted 1.5% year-on-year in the first quarter, softening from the 2.6% contraction recorded in January–December last year. Q1’s reading was the best since Q1 2020.
Looking at the details, the services sector—accounting for roughly 60% of GDP—led the improvement, falling a more moderate 3.4% (2020: -5.4% yoy), amid a softer contraction in accommodation and food services. Meanwhile, the industrial sector grew 0.2%, contrasting 2020’s 0.4% decline. Notably, dynamics in the sector were marked by a sharp contrast between muted mining and quarrying activity and robust manufacturing output. Lastly, the construction sector remained solid, growing 13.1% (2020: +11.2%) and helping to soften the decline in overall GDP in the quarter.
Moving forward into Q2, still-high daily Covid-19 cases mean social distancing measures will linger in the near term. Several regions and the two biggest cities were placed in the red zone—with the highest level of restrictions—on 6 May, which will likely weigh somewhat on the services sector. That said, a favorable base effect will support headline GDP, as shown by the short-term economic indicator produced by the Bureau of National Statistics (comprising over 60% of GDP), which surged in April. Moreover, the energy sector should recover as OPEC+ cuts are eased.
On the outlook for the year, Artem Zaigrin, chief economist at SOVA Capital, commented:
“As the country lifts lockdowns, the services and mining sectors will likely sustain the recovery momentum. The tailwinds come from an additional social and infrastructure stimulus of 1.7% of GDP.”