GDP growth slows significantly in the first quarter

A second national accounts release confirmed a notable slowdown in the Kazakh economy in the first quarter of 2024, with GDP rising 3.8% year on year. This was a far cry from the 5.0% expansion recorded in Q1 2023 and marked the worst first-quarter reading in three years.

Domestically, the slowdown was broad-based; fixed investment growth plummeted to 3.3% year on year in Q1 from 28.1% in the first quarter of 2023, while household spending increased 7.0% in the first quarter, which was below Q1 2023’s 9.8% expansion. Purchasing power was dented by falling wages and a still tight monetary policy backdrop at the outset of 2024. In addition, public consumption fell 6.7% year on year in Q1, contrasting the 8.4% increase in January–March 2023. On the external front, exports of goods and services contracted 1.7% in the three months to March (Q1 2023: +4.0% yoy). Meanwhile, imports of goods and services fell 6.3% in Q1 (Q1 2023: +31.9% yoy).

Our panelists expect the economy to have posted a similar annual expansion to Q1 in the second quarter. Over 2024 as a whole, GDP growth will fall from 2023’s rate as private spending will feel the pinch of tax hikes and still-elevated interest rates. That said, faster growth in exports will provide momentum.

Analysts at the EIU commented on risks to the outlook: “The possible imposition of Western sanctions on Kazakhstan over the re-export of Russian goods presents a downside risk to growth. However, we expect the government to continue to work to mitigate the risks posed by domestic sanctions violations in order to strengthen relations with Western powers. Higher global commodity prices and the further relocation of Russian firms to Kazakhstan are upside risks to the forecast.”

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