Author: Expert of the Analytical Center Halyk Finance Sanjar Kaldarov
According to BNS, from January to October 2024, Kazakhstan's foreign trade balance recorded a surplus of $20.1 billion, which is one-third higher compared to the same period last year. This is a result of a decrease in imports alongside a slight increase in exports. The negative dynamics of imports this year are associated with a reduction in the import of machinery and equipment, which is, in turn, due to a decline in investments in fixed capital and re-export operations with Russia. Overall, the raw material orientation of the economy continues to impact both export and import indicators. Against this backdrop, state measures should focus on non-raw material exports, particularly on the export of medium- and high-tech goods.
According to BNS, from January to October 2024, Kazakhstan's foreign trade balance recorded a significant surplus of $20.1 billion, increasing by 33.4% year-on-year (compared to $15.0 billion for the same period in 2023). This is the highest trade balance value for the last four years, excluding 2022, when export volumes sharply increased due to re-exports to Russia.
The positive trade balance this year has emerged due to the growth of exports while imports have been decreasing. For the first ten months of 2024, the volume of goods exported increased by 5.1% year-on-year to $68.5 billion (compared to $65.1 billion for the same period in 2023). However, the monthly dynamics of exports show some volatility: after an increase in export volumes of 5.1% month-on-month in August and 9.5% month-on-month in September, exports fell by 10.1% month-on-month in October to $7.1 billion. As a result, since the beginning of the year, there has been a positive, albeit quite weak, trend in commodity exports.
The volume of goods imported in the first ten months of 2024 amounted to $48.4 billion, decreasing by 3.3% year-on-year (compared to $50.1 billion for the same period in 2023). Meanwhile, the monthly dynamics of imports show a trend opposite to that of exports. In August, import volumes decreased by 0.4% month-on-month. In September, imports fell by 5.6% month-on-month, while in October they increased by 12.7% month-on-month to $5.4 billion, which is higher than all monthly figures for 2024. As a result, this has held back imports from a more noticeable decline year-on-year.
The key reason for the decline in import volumes since the beginning of the year is the decrease in imports of machinery and equipment, which account for the largest share of 42.6% of total imports. This is related to a reduction in investments in fixed capital, particularly in the mining sector, as well as a decline in re-export operations with Russia. In the first ten months of 2024, imports of machinery and equipment decreased by 8.7% year-on-year, or by $2.0 billion in absolute terms, as well as in the categories of textiles (-$0.1 billion) and leather raw materials (-$0.1 billion). At the same time, food imports during the reporting period increased by 7.3% year-on-year (+$0.4 billion), and chemical products by 2.4% year-on-year (+$0.2 billion), which partly compensated for the reduction in other categories.
On the other hand, the country's exports have been supported since the beginning of the year by high oil prices, which, despite a decline in recent months, averaged $81 per barrel over the first ten months of 2024. As a result, Kazakhstan's oil export revenues for the first ten months of 2024 increased by 6.5% year-on-year to $37.2 billion. During the reporting period, metal exports rose by 13.4% year-on-year (+$1.1 billion). Exports of chemical products grew by 18.0% year-on-year, while machinery and equipment exports increased by 7.2% year-on-year (+$0.3 billion). The most significant decrease in exports was observed in food products, which fell by 12.1% year-on-year or by $0.5 billion against the backdrop of government restrictions.
Overall, the structure of Kazakhstan's exports continues to exhibit a pronounced raw material character. The main export goods of the country remain mineral products, low-processed metals, and unprocessed food, whose total share in exports this year has exceeded 80%. In our opinion, to reduce the economy's dependence on world raw material prices, state support measures should be directed towards non-raw material exports, particularly towards the export of medium- and high-tech goods, whose dynamics should become the main indicator of the effectiveness of the country's industrial policy.
In the remaining months of 2024, we do not expect significant changes in the structure and volumes of foreign trade, especially regarding exports. Despite the depreciation of the tenge, which should, in theory, support exports, oil production continues to stagnate, and oil prices have sharply declined following the results of the elections in the United States and a decrease in demand from China. Overall, due to further improvement in the trade balance, a reduction in the current account deficit to 1.3% of GDP can be expected.