The Halyk Finance Analytical Center commented on the acceleration of retail trade this year, as reported by inbusiness.kz. According to analysts, against the backdrop of declining real incomes, this trend appears somewhat anomalous. What is the reason behind it?
From January to October 2024, the growth rate of retail trade accelerated to 8.7% year-on-year in real terms, compared to 5.6% year-on-year in the first half of this year and 6.9% year-on-year from January to October of last year. The main contribution to this growth came from the non-food sector, while the trade in food products throughout the year reflected a recovery trend following a decline in the previous two years (Fig. 1).
"High sales growth rates in the retail segment have been observed for the second consecutive year, while real incomes of the population have shown the opposite trend throughout this period, creating a contradictory picture.
Additional questions arise from the high volatility of retail trade, which is likely related to the quality of the statistics published on a monthly basis. Despite the clarification of operational data, after the final annual results are received, the discrepancies between the initial and revised figures are usually very significant," – writes HF analyst Dinara Sholanova.
Fig. 1. Contributions to changes in retail trade, p.p.
Source: BNS
Despite a slight recovery in real wages this year due to a slowdown in inflationary processes, real incomes have shown a decline. It is noteworthy that the growth of real incomes has been around zero for the second consecutive year, and although real wages increased this year, this growth significantly lagged behind the figures of previous years. Thus, from January to September, real wages increased by 2.9% year-on-year, while real incomes of the population decreased by 0.2% year-on-year for the first ten months of 2024, which is associated with the unstable dynamics of so-called other incomes, including pensions, benefits, and other transfers. Fig. 2 clearly illustrates the divergent dynamics of retail trade and population incomes in recent years. Therefore, the weak dynamics of incomes in the current and previous years do not correlate at all with the high growth rates of retail turnover during these years.
The dynamics of not only real incomes but also goods imports appear ambiguous, as imports have decreased throughout the year despite rising consumption. On one hand, there has been a reduction in investment imports, which grew at double-digit rates last year amid an increase in investments in the mining sector; on the other hand, the lack of growth in imports of consumer goods, particularly non-food items, raises questions, as these typically increase alongside higher trading volumes.
Fig. 2. Retail trade and real incomes of the population, % year-on-year cumulative
0
Source: BNS
Fig. 3. Retail trade turnover and changes in the consumer credit portfolio, T billion
1
Source: BNS
The increase in consumer lending has partially supported the growth of retail turnover this year, despite the decline in real incomes. By the end of September, the consumer credit portfolio1 had increased by 2.7 trillion tenge since the beginning of the year, or by 23.6% (compared to 1.8 trillion tenge and 20.7% in the same period last year). Meanwhile, retail trade turnover from January to September 2024 amounted to 14.9 trillion tenge, with the net change in the consumer credit portfolio accounting for about 18% of the total retail trade turnover.
Analyzing retail trade this year raises questions due to the divergent movement with key indicators that traditionally influence its dynamics. Real incomes of the population have practically not grown over the past two years, and the growth rates of real wages, despite some recovery due to a slowdown in inflation, have significantly lagged behind the growth rates of retail trade and previous years' figures. The increase in consumer lending has only partially compensated for the decline in incomes, providing support to retail trade. Moreover, the current contradictory trends are also indirectly evidenced by the dynamics of consumer imports, which have decreased throughout the year despite rising consumption. Considering the divergence of key factors, the current acceleration of trade appears somewhat anomalous.
Quality of Retail Trade Statistics
In recent years, there has been high volatility in retail trade, complicating the analysis and assessment of the extent of the influence of individual factors affecting its dynamics throughout the year, analysts at HF note.
One of the reasons for the high volatility, in their opinion, may be the quality of the statistics published on a monthly basis. Although these data are revised over time, discrepancies between the initially published and revised data often exceed 1 percentage point - in the analysts' view, this is a considerable divergence (Fig. 4).
For instance, according to initial data, the estimated growth of retail trade in 2023 was 7.7% year-on-year, while the revised figure was 5.2% year-on-year (indicating a discrepancy of 2.5 percentage points).
"The existing issues in trade statistics, in our opinion, not only complicate current analysis but ultimately create a contradictory picture regarding what is happening in the economy as a whole," – states the analytical note.
Fig. 4. Initial and revised data on retail trade, % year-on-year
2
Source: NBK
Illustrative photo