Kazakhstan economic growth moderates amid evolving foreign trade

KAZAKHSTAN - In Brief 14 Jun 2024 by Evgeny Gavrilenkov

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The Bureau of National Statistics reported that in 5M24, the short-term indicator (a monthly proxy measure of the overall economic activity) grew by 3.7% y-o-y, i.e., down from 3.9%, 4.7%, 5.2% y-o-y in 4M24, 1Q24, and 2M24. In 2023, it grew by 5.1%. Even though not a complete set of monthly economic statistics have been published yet for May, one may conclude that slowing trade (wholesale in particular) was the main drag on economic growth. In 5M24, total trade grew by 3.1% y-o-y as the wholesale trade expanded by a mere 2.2% y-o-y. Retail sales looked more stable, having grown by 5.2% y-o-y over the same period. The Bureau also reported that 4M24 exports declined by 0.5%, while imports shrank by 7.9% (both y-o-y). Kazakhstan cuts trade relations with CIS countries, Russia in particular. Exports to Russia fell by 27.6% y-o-y in 4M24. The contraction of exports destined for CIS countries, in general, was also significant (by 19.8%). Imports from Russia fell by 5.9%, i.e., less than total imports. Exports to the non-CIS countries grew by 4.6%. It looks as though the contraction of exports to Russia was largely caused by reduced re-exports of durable goods, such as cars, re-exported from Europe as the Chinese manufacturers flooded the Russian markets with manufactured products, such as cars, and their parts to be assembled into ready-made cars in Russia. Overall, such restructuring of Kazakhstan's geographical foreign trade structure directly affected wholesale trade, which is a sizable constituency of the country’s economy and economic growth in general. This process is not over yet.