Kazakhstan: Economy

Economic growth in Kazakhstan slowed to 3.9% in the first half of 2014, the slowest rate since 2009, from 5.1% in the same period of 2013. The 19% devaluation of the Kazakh tenge in February 2014 depressed services, while industrial output fell by 0.4%, reflecting a decline in oil production and slowdowns in metallurgy (particularly copper), chemicals, and other manufacturing. However, agriculture expanded by 3.3%, and construction by 4.2%, benefiting from ongoing state support. Higher fixed capital investment, improved consumer sentiment, and massive government stimulus packages are expected to accelerate growth in the second half of 2014 and into 2015. Nevertheless, the growth forecast is downgraded for both years.

Selected Economic Indicators (%) - Kazakhstan 2014 2015
ADO 2014 Update ADO 2014 Update
GDP Growth 6.0 4.5 6.4 5.2
Inflation 11.5 8.7 8.8 7.7
Current Account Balance (share of GDP) 0.6 0.6 2.3 1.9

Source: ADB estimates.

Inflation in the first half of 2014 eased to 6.1% from 6.6% a year earlier. Despite extensive price controls, prices for food rose by 5.7%, compared with 4.8% in the first half of 2013, and for other goods by 5.8%, compared with 3.3% in the earlier period. Price increases for services slowed to 6.9% from 12.0% a year earlier, owing to regulatory restrictions on utilities. Efforts to freeze prices caused shortages that are expected to fuel inflation in the second half of 2014. Nevertheless, because of the slowdown in growth, the inflation forecast is revised down by 2.8 percentage points in 2014 and by rather less in 2015.

The current account posted a record surplus of $6.3 billion in the first quarter of 2014, as exports expanded by 10.8% on a 22.0% increase in oil exports. Imports slid by 10.8%, mainly reflecting a 19.5% decline in imported investment goods. As both developments are considered temporary, the current account surplus for 2014 is still projected at 0.6% of gross domestic product (GDP), but the projected surplus for 2015 is revised down on the expectation that the Kashagan oil field will not be commissioned before 2016.

Source: ADB. 2014. Asian Development Outlook 2014 Update. Manila.