The crisis caused by events in Ukraine triggered huge problems across the Eurasia region. For Kazakhstan, headline growth estimates have been revised downwards from to 2.0-2.5% (from 4.0% last year). Refer to our Kazakhstan Briefing Modernization: Means, Motive and Opportunity, (issued in May), for an in-depth analysis of economic trends and political changes.
The January protests re-enforced the president’s motivation for reform. Several major initiatives are expected this year to invigorate economic modernization and social reforms. The first stage will be the major overhaul of the constitution on June 5th.
The streets of Almaty are calm today and with a heavy security presence. Services (banks, ATMs, transport, internet) have been restored and businesses reopened. he former head of the KNB (Security Agency) has been charged with treason and several others have been charged with inciting protests. Over 6,000 people are reported to have been arrested.
This is a quick reaction to events currently unfolding in Kazakhstan. While none of this is a surprise, the timing and the speed are. We have previously provided background to the various conflicts “brewing” in the country and will provide more detailed commentary and analysis – especially as it concerns the economy, investors, and business interests in the country – as events unfold in the coming days and weeks.
The Kazakhstan economy contracted by only 2.6% in 2020, a good result considering the impact of the coronavirus and the weak oil price. he strong recovery in the oil price and the rise in oil output, as part of the OPEC+ deal, will support the recovery this year.
After many years of including the development of the agriculture and food sectors in five-year development plans, President Tokayev’s government has become a lot more focused on practical steps to help the sector grow and become a bigger part of the economy and exports.
The value of the Kazakh e-commerce market grew 80% YoY in 2019, to reach US$1.6 billion. Most online companies have reported stronger growth in 1H20 because of the lockdown. Over the first four months of 2020, Kaspi saw orders on its marketplace platform rise 103% to a record KZT69 billion (US$172 million).
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Economic growth strengthened in 2019. GDP expanded by 4.5% in 2019, up from 4.1% in 2018. The decline in the oil sector contribution, due to several maintenance disruptions, was more than offset by the better performance in retail, construction and transport sectors.
Nursultan Nazarbayev surprised everybody today with the announcement that he is to step down as president of Kazakhstan with immediate effect. However, it also appears that he has been at least clarifying the rules for succession in recent months and planning for an early resignation.
The recovery in the oil price is boosting several of the major regional economies: Russia, Kazakhstan, Azerbaijan and Turkmenistan. Remittance flows, typically from the hydrocarbon rich economies to others, have also been picking-up strongly and helping to boost both headline growth and consumer activity.
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