Kazakhstan’s current account plunged 70% y/y to USD 2.2bn in H1, according to a preliminary balance of payments estimate revealed by National Bank of Kazakhstan (NBK). Trade balance posted a surplus of USD 18.1bn, which is almost 30% y/y less than in the respective period of previous year.

Narrowing trade surplus was the result of 10% y/y increase of imports, which stood at USD 23bn, as well as 12% y/y decrease of exports, which amounted to USD 41.1bn. Balance of services posted a deficit of USD 3.2bn, which contracted 9% y/y comparing to H1/12.

As far as key data on financial account NBK revealed that FDI inflows surpass outflows by USD 2.7bn in H1/13. This constitute 61% y/y drop in direct investment net inflows as they amounted to USD 7bn in H1/12. Additionally, portfolio investments outflows exceed inflows by USD 1.4bn in H1/13. This constitutes almost 85% y/y drop of portfolio net outflows as they reached USD 9.1bn in H1/12.

Significantly, a sharp deterioration of Kazakhstan’s current account position in H1 is the result of falling demand for Kazakhstan’s energy exports and soaring imports. It is worth noting, however, that the current account surplus is dwindling from a very strong base – in H1/12 current account surplus reached USD 7.2bn. Our calculations, which are based on preliminary data, show the current account/GDP ratio in H1/13 reached 2.3%, which should be still considered a solid result.