Kazakhstan macro: economy doing well—but unclear how well
The Bureau of National Statistics reported that economic growth looked strong in 1Q25 and 4M25: in the former case, GDP grew by 5.6% y-o-y, and in the latter case, the short-term indicator was up y-o-y by 8.5% in 4M25 and 8.9% in April alone. The short-term indicator grew faster than GDP because it incorporates faster-growing segments, such as industry, trade, construction, and transportation (apart from agriculture and communications, which posted moderate growth). The Bureau persistently refrains from publishing q-o-q real GDP growth numbers or m-o-m growth statistics for the short-term indicator (as well as for some other time series). Hence, short-to-medium-term forecasting is complicated in the sense that its reliability is limited, and an excessive reaction to the most recent statistics could be inappropriate. Meanwhile, as the nominal figures are always available, it means that the Bureau, for some reason, doesn’t want to show (or cannot accurately calculate) deflators for the previous periods. Hence, the annual GDP statistics seem to be the most reliable benchmark, and these data indicate that Kazakh economic growth has been generally stable in recent years (excluding the 2020 pandemic shock year), and somewhat stronger than, say, a decade ago.
Lacking quarterly GDP sectoral statistics in real terms, it makes sense to dig into nominal figures. These data point to a steady rise of the 4Q weight in total yearly GDP, which seems suspicious. In the past ten years, the share of the fourth quarter in total GDP production has increased, driven by an even faster rise in this metric for the trade and construction segments. Most likely, under-collected statistics during the calendar year are being allocated to the fourth quarter and inflating the latter’s growth rate.
The main conclusion from these observations is that the medium-term forecasting of the Kazakh economy should not be affected by short-term intra-year statistical volatility. Generally, it looks as though forecasting at year-end or at the beginning of a new year is the best timing, i.e., when the full-year data are either available or can be estimated with a greater degree of confidence. As the government drafts the coming year’s budget in mid-year, this would not appear to be the most comfortable season. Hence, official forecasts often mismatch reality, and the budgets of each current year have usually been amended. We expect Kazakhstan’s GDP to grow by 5.3% this year.
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