World Bank Report: Kazakhstan’s Monthly Economic Outlook
The World Bank’s monthly economic update for Kazakhstan in May has been released, highlighting key changes in economic activity, inflation, and bank lending.
According to the report, real gross domestic product (GDP) grew by a modest 0.7% in the first quarter, a decrease from the steady 1.2% quarterly average seen in 2023. This slowdown is attributed to the dampening effect of reduced investment and fiscal spending.
In terms of inflation, consumer price inflation decreased to 8.5% year-on-year in May, down from 8.7% in April, reflecting softer domestic demand. Monthly inflation also slowed for the third consecutive month to 0.4% month-on-month in May. The report notes that food and non-food prices moderated, while services prices are expected to increase to align with higher costs linked to real wage growth.
The trade surplus in the first quarter saw a 9% year-on-year increase to $5.7 billion, largely driven by decreased imports due to sluggish domestic demand. Imports were down by 7% year-on-year in the first quarter, while goods exports fell by 2.6%, primarily due to declines in exports of chemical products and machinery and equipment.
Additionally, real lending rates for both firms and households surged to 8.4% and 11.1% in April, exceeding pre-pandemic levels. This increase in lending rates is attributed to sticky headline rates, falling deposit rates, and declining inflation, leading to higher net interest margins and profits for banks.
Overall, the update provides valuable insights into the current economic landscape in Kazakhstan, showcasing trends in GDP growth, inflation, and trade dynamics that are shaping the country’s economic outlook.
