Kazakhstan: Surge in export growth drives 2018's solid expansion
May 6, 2019
A recently-released breakdown of GDP by expenditure confirmed that the economy grew 4.1% in 2018, thus sustaining the solid pace of expansion logged in the January–September period, in which the economy also expanded 4.1% year-on-year. The external sector buoyed growth in the year, compensating for deteriorating dynamics on the domestic side.
Despite headwinds arising from ebbing global momentum and trade war tensions, export growth surged to 20.3% in the 12-month period, up from 8.9% in the previous 9-month period. Meanwhile, import growth remained largely stable from the previous period , dipping to 3.6% in 2018 (January–September: +3.7% year-on-year). Thus, the external sector’s overall contribution to growth improved notably.
On the domestic side of the economy, government spending contracted sharply again as efforts to strengthen the fiscal account continued (January–December: -14.0% yoy; January–September: -13.9% yoy). The austerity measures likely weighed on overall living standards and curbed household spending, with private consumption growth weakening to 2.0% (January–September: +5.1% yoy). Fixed investment growth also fell amid less favorable financing conditions, although the drop was softer (January–December: +3.9% yoy; January–September: +4.6% yoy).
Looking ahead, the growth outlook remains under pressure owing to challenges on the external front, with the economy set to lose steam in 2019. That said, the stimulus package unveiled by former president Nursultan Nazarbayev before he left office—aimed at shoring up consumption and boosting infrastructure development—together with easing monetary conditions, and China’s slow recovery should support growth.
Author: Nihad Ahmed, Economist