Current account deficit narrowed in 1Q24

KAZAKHSTAN - In Brief 02 May 2024 by Evgeny Gavrilenkov

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According to the National Bank of Kazakhstan, the current account narrowed in 1Q24 to about $0.89 bn, while in 2023 its quarterly deficit varied from $1.6 bn to $3.4 bn. According to recent revisions the current account deficit reached almost $8.66 bn last year.In 1Q24, the trade surplus accounted for $5.65 bn while in 1Q24 it was at $5.18 bn. In 1Q24, exports and imports reached $18.63 and $12.98 (versus $19.13 bn and $13.94 bn) in 1Q23. In 1Q24, the services balance was almost the same as in 1Q23, while the income balance was less negative.What looks most essential in these data is the fact that imports contracted in 1Q24 (as exports and the oil price remained relatively unchanged). Having reached the peak in 2Q23 at $15.48 bn quarterly imports were on a downward path (having fallen to $15.02 bn in 4Q23) therefore pointing to a gradually cooling domestic demand. In 2023 as a whole, imports reached $59.71 bn. It looks as though domestic demand will continue to cool down this year amid slowing growth in domestic credit. If so, the current account deficit will continue to narrow this year, reducing chances of a weaker tenge and limiting budgetary revenue flow.