Kazakhstan: Sharp economic slowdown is registered in 2015
February 18, 2016
Low commodities prices and deteriorating economic conditions in Russia took a heavy toll on the Kazakh economy in 2015. According to the Statistics Agency of the Republic of Kazakhstan, GDP expanded 1.2% in 2015. The reading marked a notable deceleration over the 4.1% increase registered in 2014 and represented the weakest growth rate since 2009.
Although the GDP data did not include a breakdown by expenditure components, additional data showed that the economic slowdown in 2015 was primarily the result of a deterioration in the industrial sector. Industry contracted 1.5% in 2015, which was the result of a plunge in activity in the extraction sector (both in mining and oil extraction) in the wake of a low-commodity-price environment. Meanwhile, growth in the manufacturing sector weakened in 2015, while in construction it remained solid. Looking at the other two main sectors of the economy, growth in agriculture accelerated from 1.3% in 2014 to 4.4% in 2015. Conversely, services grew 2.3% in 2015, which represented a deceleration over the 5.7% increase tallied in 2014.
The current slack in economic activity, along with prospects of a protracted recession in Russia and low commodities prices—particularly in oil and base metals—prompted the Kazakh government to cut its growth forecast for this year. The government now expects the economy to expand 0.5% in 2016, which was notably revised down over a previous 2.1% projection. According to the government, the main factor behind the cut is the oil price. Previously, the government had based its budget on an annual average oil price of USD 40 per barrel. In its adjusted budget for this year, the government now predicts an average oil price of USD 30 per barrel.
Author: Ricardo Aceves, Senior Economist