Economic growth decelerates in May: more evidence

KAZAKHSTAN - In Brief 17 Jun 2024 by Evgeny Gavrilenkov

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The Bureau of National Statistics continued to publish its May economic statistics, and the most recent revelations confirm that the country’s economic growth gradually decelerates, albeit from high 2023 numbers, so that the 2023 growth looks not too bad. Today, the Bureau announced that in 5M24, the construction sector grew by 8.1% y-o-y as in 4M24 and 1Q24 y-o-y growth numbers looked somewhat better (12.2% and 15.8%). At the same time, the Bureau reported that investments in production capacity shrank in 5M24 by 6.5%. In 4M24 and 1Q24, they were down y-o-y by 5.3% and 0.8%. Interestingly, in 2M24, investments grew by 7.9% y-o-y. Even though investment statistics can be quite volatile, the conclusion is that investments in new equipment shrank as construction growth was still in positive territory. The latter, however, also includes residential construction. Meanwhile, industrial production grew by 3.0% y-o-y in 5M24 (versus 3.2% in 4M24). The mining segment was up by 0.6% and 1.1% (also y-o-y over the same periods. Manufacturing grew steadily by 5.2% y-o-y in both periods. Another conclusion, which can be derived from recent economic and financial statistics, is that recent growth deceleration may have originated from the efforts of the authorities to extract more tax revenues from the taxpayers. We repeatedly mentioned that a too strong (and, until recently, appreciating} tenge was a powerful drag on the collection of tax revenues linked to the exchange rate. Budgetary statistics for May are not yet available, but in 4M24, the so-called non-tax revenue collection (which includes various fines and penalties), was well ahead of the 4M24 budgeted “expectations”. It was...