Kazakhstan Economic Forecast

Cumulative year-on-year economic growth accelerated through December compared to January–September. The upturn was driven by stronger increases in public and private spending, as well as fixed investment. Turning to Q1 2023, growth should have remained resilient thanks to a base effect; last January saw major political unrest, which weighed on activity. In January–March, the economic activity index grew at a largely similar pace to Q4. Other high-frequency indicators painted a similarly positive picture in the same period: Industrial activity rebounded from Q4’s contraction, retail sales growth accelerated, and oil production reached a more-than-one-year high. Meanwhile, in April, British, EU and U.S. diplomatic envoys visited Kazakhstan to prevent the re-export of sanctioned goods to Russia, threatening secondary sanctions in case of non-compliance.

Inflation came in at 16.8% in April, down from 18.1% in March. Despite the downtick, it remained well above the Central Bank’s 4.0–6.0% target range. Restrictive monetary policy and declining commodity prices should allow inflation to ease throughout 2023. That said, increased government spending and higher-than-expected commodity prices are upside risks.