Kazakh GDP contracts 1.5% y/y in Q1 updated figures show

Kazakh GDP contracts 1.5% y/y in Q1 updated figures show
Kazakh GDP contracts 1.5% y/y in Q1 updated figures show / bne IntelliNews
By bne IntelIiNews June 3, 2021

Kazakhstan's GDP contracted by 1.5% y/y in the first quarter, according to latest official figures provided by the national statistics office. 

The figure is very slightly different from the preliminary results published earlier, which showed that GDP contracted by 1.6%. The first quarter’s GDP contraction was shallower than the 4.5% drop posted in January and the 2.9% decline seen in January-February. Kazakhstan’s GDP shrank by 2.6% y/y in 2020. The contraction was driven by a 5.6% y/y drop in the services sector, which was hit by lockdowns brought in to stem the spread of the coronavirus (COVID-19) imposed in March-May and July-August. The economy was also likely hit by global impacts of the pandemic, including falling demand for energy and reduced world oil prices. 

The 1.5% contraction in the first quarter of 2021 shows signs of an expected economic recovery brought about by the easing of pandemic-related restrictions.  

“In terms of GDP by production, the main factors behind the improvement were industrial output (up 0.2% y-o-y versus a 1.9% decline in 4Q20), accommodation and food services (down 10.7% in 1Q21 versus a 35.4% drop in 4Q20) and public administration (up 12.9% versus a 1.9% decline in 4Q20),” Sberbank CIB said in a note. “Transportation and storage shrank by 17.4% in 1Q21, though the sector's weight in GDP was reduced in 1Q20, meaning that it made a smaller contribution to the GDP figures for 1Q21. Financial services deteriorated, growing 0.5% in 1Q21 following 9.2% growth in 4Q20, as did real estate (-3.9% versus 1.5% growth).”

Sberbank CIB expected that “the low base from 2Q20 will significantly boost the economy in 2Q21”, but sees the effect gradually ebbing over the rest of the year. The analytical arm of the Russian bank projects GDP growth at 3% this year.

The World Bank’s Kazakhstan Economic Update published on January 29 anticipated that the Central Asian nation's economy will grow by 2.5% in 2021 and by 3.5% in 2022. In a later update in March, the World Bank said that it projected “3%-4%” growth. It also saw significant downside risks due to the uneven worldwide economic recovery and higher debt-related risks on global financial markets.

World Bank experts regard 2020 as the most challenging year experienced by the ex-Soviet state’s economy in two decades.