Kazakh economy continued to expand in August

KAZAKHSTAN - In Brief 18 Sep 2023 by Evgeny Gavrilenkov

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The Bureau of National Statistics reported that the short-term economic indicator (an aggregate measure of economic activity in six main sectors of the country’s economy) grew by 5.3% y-o-y in 8M23. This rate was the same as in 7M23 implying that in August alone the economy reproduced more or less the same growth trajectory as in August 2022. Note that in 1H23, Kazakhstan’s GDP grew by 5.1% y-o-y, which made the Kazakh government more optimistic about GDP growth in 2023 as a whole. The government expects it to expand by 4.7%. Industry grew by 3.8% y-o-y in 8M23 as the mining sector expanded by 4.3% and the manufacturing sector was up by 3.1% (also y-o-y over 8M23). Retail sales grew by 7.3%, while wholesale expanded by 11.0% (y-o-y in 8M23). Industry and trade (wholesale, retail combined with auto and moto repairs) accounted for 29.4% and 15.8% of the country's GDP in 1H23. Freight transportation turnover grew by 4.3% in 8M23, and the IT/communications sector grew by 8.3% over the same period. Construction accounted for 5.0% of GDP in 1H23 and grew by 11.4% y-o-y in 8M23. The Bureau also reported that investments in production capacity grew y-o-y in August and 8M23 by 10.9% and 12.2% pointing to an ongoing restructuring of the country's economy and its adaptation to an evolving external environment that started to change in February 2022. This change is more clearly seen in the structure of foreign trade, the FX market, and some other areas. Relatively strong growth numbers achieved amid such a transformation do not look bad at all. We'll provide more color on these issues in one of the reports that will follow.