LoginMore focused. 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.
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.
This is the first report in a three-part review covering the consumer sectors in the five Central Asian states. Part 2 will review the Caucuses countries and part three will focus on Ukraine and Belarus. These reports will provide an overview of the trends in the major consumer sectors and identify the major and emerging themes in each country. Macro-Advisory provides more detailed strategic and due-diligence analysis covering all of the identified themes.
While the government talks about diversification the reality is much greater emphasis and visible progress in expanding oil and gas activities.
Growth. 2018 growth is expected to be close to 4.0% and not far off from that of 2017. The outlook for 2019 is slightly weaker growth because of the expected lower average oil price. Consumption and investment into manufacturing, agriculture and logistics are expected to be key drivers.
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. It appears he prefers a position where he can manage the succession process and to ensure a smooth succession, rather than take the risk of waiting. He will be 79 in July.
Strong growth based on oil. Kazakhstan’s economy grew by 4% YoY last year (from 1% in 2016) and looks set to replicate that strong growth again this year. The key driver of last year’s recovery and this year’s expected growth is the combination of rising oil output and the oil price recovery.
Radical changes. After spending several years of trying to mitigate the
impact of the currency collapse and economic slowdown, the government
has adopted a radical program to try and revive the economy and attract a
bigger volume of inward investment. This includes:
Higher budget spending and a 3% deficit
Build up debt and take more money from the National Fund
Take the bad assets from banks into a Bad Bank
Tackling high-level corruption
Changes in government
Constitutional changes aimed at calming concerns over succession
Burdensome Soviet legacy. The agricultural sector suffers from the legacy of the Soviet system, during which resources were misallocated on a massive scale and the shock changes of perestroika in the early 1990s led to massive land abandonment and a dramatic drop in production.
Hydrocarbon is the common denominator. The countries of the Caspian Corridor share one major common factor – they are all vulnerable to hydrocarbons.
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All Rights Reserved
