Kazakhstan macro: economic growth to surprise on the upside in 2023

KAZAKHSTAN - Report 17 May 2023 by Evgeny Gavrilenkov

The economic situation in Kazakhstan remained stable in April, and the economy continued to expand steadily as the short-term indicator (an aggregate measure of activity in industry, agriculture, construction, transport, trade, and communications) increased by 5.5% y-o-y in 4M23. In 1Q23 it was up by 5.1% y-o-y. The short-term indicator accounts for about 60% of GDP. It looks as though domestic demand is strengthening in 2023. This time, however, it is growing mostly due to private activity, while last year demand was strongly supported by massively amended government expenditures. Even though the country’s Bureau of National Statistics has not yet published the 1Q23 GDP data by end-use, the production side of 1Q23 GDP pointed to 4.9% y-o-y growth.

The fact that the country’s economic performance was good enough in 1Q23 fully matches the fact that tax revenues exceeded the quarterly plan—even amid decelerating inflation. Given the steady economic growth in April, budgetary performance may well have been even better last month (budget execution statistics for April will be published later this month). At a glance, it looks as though the budget deficit this year will be also lower than planned, as no major amendments of the expenditure side are expected so far.

Overall, the conclusion from the recent economic and budget execution statistics is that the Kazakh economy will likely surprise on the upside this year.

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