Expert Warns Kazakhstan’s Rapid GDP Growth May Slow in Second Half of Year

Kazakhstan’s GDP grew by 6.3% year-on-year in July, according to official figures. While this is seen as a positive indicator, political scientist Gaziz Abishev doubts the country can sustain such growth rates, Orda.kz reports.

As Abishev wrote on his Telegram channel, growth above six percent is “certainly a good indicator,” but keeping it at that level will be difficult.

It seems that Kazakhstan, under pressure from circumstances, is nevertheless restructuring its economy, rationalizing spending and setting more pragmatic priorities. In 2013, when oil prices were above $100 per barrel the entire year, GDP growth was 6%. Now, with oil prices below $70 per barrel (with accumulated dollar inflation), growth so far exceeds 6%, he said.

Abishev noted that much of the economy is being driven by government spending, especially in construction, where activity increased by 18.5% due to projects such as building schools and hospitals, laying roads, and installing power lines — all funded from the budget rather than private investment.

In other sectors, growth was more moderate: goods production rose 8.3%, services 5.2%, industry 6.9%, and agriculture 3.7%.

He warned that factors such as oil market conditions and the budget deficit will likely slow growth before year-end.

They are unlikely to remove Russia from the oil market, and even if they want to, it is a big question whether it will work. The Gulf countries are ready to enter the market with additional volumes. At the same time, the US has not yet completed its campaign to increase trade duties on various countries around the world. Certain economic problems are also visible in China. The issue is also that the budget deficit, which has been discussed since the middle of last year and has become the reason for changing the tax policy, does not allow for manually maintaining GDP growth with large-scale injections, as in 2008–2009,  Abishev said.

In his view, both external and internal factors will keep Kazakhstan from maintaining the same pace of economic development in the second half of the year, making a moderate slowdown likely.

Original Author: Nikita Drobny