The analytical center Halyk Finance has improved its GDP growth forecast for Kazakhstan this year: from 3.9% to 4.2% year-on-year, reports inbusiness.kz. This is attributed to strong trade growth and a moderate increase in the manufacturing sector, which offsets the slowdown in the mining sector.
At the same time, the sustainability of trade growth raises questions against the backdrop of slow growth in household incomes, analysts note.
According to BNS data, from January to November 2024, the short-term economic indicator (STEI), which covers more than 60% of GDP, reached a maximum level of 5.6% year-on-year, which is 0.3 percentage points higher compared to the figure for the first ten months of 2024. In the first half of 2024, the STEI was only 4.4%, and it increased to 5.3% over the nine months.
Fig. 1. GDP growth dynamics and sectors in 2024, %
Source: BNS
The main source of growth remains trade, which increased by 8.2% year-on-year, accounting for 15.8% of GDP. The trade sector continues to demonstrate abnormal growth rates, which rose from 7.3% year-on-year over the first ten months to 8.2% year-on-year by the end of eleven months this year. The main contribution to this growth came from retail trade, whose growth rates increased from 8.7% year-on-year for the first ten months of 2024 to 9.3% year-on-year for the eleven months of 2024. Such significant growth was only comparable to the recovery period of the economy after the pandemic in 2021. However, at that time, there was an increase in wages and real household incomes, as well as a low base effect. Currently, such changes are not occurring, and real household incomes, on the contrary, decreased by 0.2% over the first ten months of 2024.
Within the structure of retail trade, the non-food sector showed significant growth, increasing to 9.4% year-on-year during the reporting period (compared to 8.5% year-on-year for the first ten months of 2024). Sales of food products in the retail segment also accelerated to 9.0% year-on-year (compared to 8.9% year-on-year for the first ten months of 2024). The growth of wholesale trade for the eleven months of 2024 was 7.6% year-on-year compared to 6.6% year-on-year for January-October 2024.
The manufacturing industry grew by 5.3% year-on-year by the end of eleven months of 2024, which is higher than the figure of 3.4% year-on-year for the same period in 2023 and 4.8% year-on-year for the first ten months of 2024. The sector's share in the GDP structure is 12.4%. The main drivers of growth were metallurgy, which showed an increase of 7.2% year-on-year, and machine engineering, which increased by 6.9% year-on-year.
At the same time, the mining sector showed minimal growth — only 0.1% year-on-year by the end of eleven months of 2024 compared to 5.2% year-on-year for the same period in 2023. The sector's share in GDP is 13.5%. Although 2024 began with strong growth, oil production gradually declined. During the first nine months of the year, production volumes remained relatively stable, fluctuating in the range of 7-7.8 million tons per month. However, in October, there was a sharp decline: production fell by 15.2% compared to October 2023, decreasing from 7.7 million tons to 6.6 million tons. This is related to maintenance work at the Kashagan and Tengiz fields. The forecast for oil production by the end of 2024 was once again revised downward, from 88.4 million tons in November to 87.8 million tons, with an initial plan at the beginning of the year of 90.3 million tons, according to the Ministry of Energy.
The construction and transportation sectors continue to show stable growth at 10.3% year-on-year and 8.1% year-on-year, respectively, which nearly matches the impressive growth figures of the previous period. A slight slowdown in the transport sector is associated with a decrease in passenger turnover growth rates to 13.6% year-on-year (13.7% year-on-year for the first ten months of 2024). Meanwhile, the communications sector slowed its growth from 5.7% year-on-year for the first ten months of 2024 to 5.3% year-on-year for the eleven months.
Agriculture continues to demonstrate high growth at 13.4% year-on-year (12.7% year-on-year for the first ten months of 2024). For agriculture, it is important to note the low base effect from the previous year. In the same period last year, the agricultural sector experienced a decline of 8.4% year-on-year. The main growth was driven by crop production, which increased by 19.9% year-on-year (after a 15% decrease in 2023 compared to 2022). At the same time, livestock production grew by 3.2% year-on-year, which is almost in line with last year's level (3.3% year-on-year compared to 2022).
"We forecast that GDP growth this year will be around 4.2% year-on-year, exceeding our previous forecast of 3.9% year-on-year. This increase is driven by abnormal trade growth and moderate increases in the manufacturing sector, compensating for the decline in oil production in the mining sector. The contribution of other sectors remains limited due to their small share in GDP, including agriculture and construction, which depend on government support," the analytical note emphasizes.