The business activity index (BAI) has declined for three months in a row in Kazakhstan. Over the period from June to September of 2023 the index dropped by 2.1 points from 51.1 to 49, according to the Kazakhstan Stock Exchange (KASE).
The BAI is an indicator that characterizes the state of the economy in the real sector and allows you to explore the dynamics of economic trends as well as critical and turning points of the business cycle. In September, the exchange asked representatives of 519 big, small and medium-sized businesses from all sectors of the economy. When BAI is lower than 50 points, it means that the business activity is negative and conversely, the activity is positive when BAI is higher than 50 points.
This time BAI is in the negative zone for all sectors. The construction sector reported the biggest decline from 49.9 points in August to 48.5. In the production, service and mining sectors, the index is at 49.4 (49.7 in August), 49.1 (49.9) and 48.6 (49.5), respectively.
Business activity improved in five regions of the country, while in 13 regions it has deteriorated. The North Kazakhstan and Mangystau regions reported the highest rate of the index: 55.9 and 44.6, respectively.
According to Rustem Orazalin, director of the monetary policy department of the National Bank, the business activity in all sectors except mining is limited by delivery time. In the mining industry, business activity has declined after a setback in output.
In turn, the business climate index slipped to 9.4 points from 10.8 in August. Although the assessment of the current business environment improved, Kazakhstan’s business is now less positive about future business conditions. The current infrastructure was assessed as «slightly positive,» while negative assessments for other factors such as tax burden, protection of business rights and access to finances and loans are a little bit higher.
«The indicator of the business cycle clock is still in the growth area as assessment of the current and future environment for business remained positive,» Orazalin said.
The evaluation of the current business conditions by enterprises has risen to 2.6. At the same time, the assessment of the business conditions for the next six months declined to 16.5. The business cycle clock shows in what phase of the cycle the national economy is in a certain period of time.
The business activity has been declining in Kazakhstan since June. At the time, the rate was at 51.1 and by July it dropped to 50.7 due to a decline in stocks and output in the mining industry, slow delivery and low demand for construction of new buildings. In August, business activity declined to 49.9 because of lower output in the production sector and weak hope for rebounding of delivery time in the mining and construction sectors.
Over the period from 2016 until now, the lowest BAI was in April 2020 (37.3), when the vast majority of businesses couldn’t work because of COVID-19 restrictions. The highest rate of the index at 53.7 was registered in June 2017 and April 2018.
There were no changes in terms of business activity during the entire year of 2020. BAI surpassed the bar of 50 points only in March 2021, although it has been in decline since September that year. The index was higher than 50 points in December 2021 and February 2022. After the full-scale Russian invasion of Ukraine, the BAI didn’t exceed 50 points for about a year. In January 2023, some positive expectations in terms of business activity were reported. This trend lasted until August when the BAI entered the negative zone once again.
