Kazakhstan macro: recent balance of payments statistics point to gradual decoupling from Russia
In recent days, the National Bank of Kazakhstan and the country’s Bureau of National Statistics published their foreign trade and balance of payments statistics for 1Q24, suggesting that the trade surplus widened while the current account deficit narrowed. Imports grew steadily until mid-2023 and generally stopped growing since then (apart from an unusual spike in December 2023, which may have been an accounting/reporting issue). At the same time, exports also stopped rising, and eventually, it appeared that in 1Q24, the trade surplus became wider than in 1Q23. Note that an essential part of export earnings goes straight to the National Fund according to the budget rules, and later some of these earnings are sold on the local FX market and go to the budget as budgeted transfers.
To some extent, recently published statistics explain the continuous strengthening of the tenge in recent months (as of this writing the tenge was trading at USD/KZT 443). Apart from capital inflows offsetting the current account deficit, the tenge was supported by continuous FX sales from the National Fund, which increased in April. Still, the tenge remains quite sensitive to the direction of capital flows, and this direction may experience a change at some point, as happened in the past on several occasions.
One conclusion from the recent statistics is that domestic demand in Kazakhstan is becoming less overheated as demand for imported goods weakens. It also implies that demand for FX appears lower than it was a year ago. Another conclusion is that even though Russia still remains Kazakhstan's main trading partner, trade relations between the two countries are gradually shrinking.
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