Business activity in Kazakhstan is still in negative zone
As of year-end 2023, the business activity index (BAI) declined by 0.3 points to 48.7 due to the deteriorated performance of the mining industry and the service sector, according to the National Bank.
The BAI reflects the current conditions of the real economic sector and actual changes in the performance by businesses. The indicator also allows the regulator to examine the dynamic of current trends and critical pivots of the business cycle. Changes are positive when the BAI is higher than 50 and conversely is negative if the rate is lower than 50. The further the index rate from the point of 50, the bigger changes in the sector.
In the mining industry, the index declined from 47.2 to 46.8 points, reporting fewer new orders. In the service sector, the BAI dropped from 48.4 to 47.8, while business activity in the manufacturing and construction sectors improved to 51.8 (51.4 in November 2023) and 50.2 (50.3 in November), respectively. Almost all components of these sectors reported an increase except for supply deadlines.
Business activity improved in the country’s six regions and deteriorated in 11 regions. The Turkestan region reported the highest rate of the index (57), while the North Kazakhstan region reported the lowest (42.7).
The business climate index (the averaged current and future business conditions) reached 7.6 points compared to 7 points in November 2023. The current conditions were assessed as slightly positive (0.6), while the assessment of future business conditions for the next six months hasn’t changed (15).
In December 2023, the indicator of the business cycle, which demonstrates a specific phase of the country’s current economic cycle, was at the edge of the growth area.
Businesses surveyed by the regulator said that access to finances and loans has improved. The change in infrastructure and demand was assessed as neutral, while tax burden and business protection issues received negative estimations.
Business activity in Kazakhstan has been decreasing since June 2023. At the time, the rate was at 51.1 and then declined to 50.7 in July due to fewer new products and stocks in the mining industry and because of missing supply deadlines and a low number of new orders in the construction sector.
In August, business activity dropped to 49.9, driven by a decline in manufacturing and poor rebounding of supplies in the mining and construction sectors. Since then, the indicator has never surged above 50 points.
Over the period from 2016 to December 2023, the BAI reported the lowest point in April 2020 (37.3), when the majority of businesses were forced to stop working because of the COVID-19 pandemic. On the other hand, in June 2017 and April 2018, the indicator reached its peak of 53.7 points.
Throughout 2020, there were no positive changes in business activity in Kazakhstan. The BAI managed to surpass the bar of 50 points only in March 2021 but since September that year started to decline again. In December 2021 and February 2022, the rate was higher than 50 points for a short period. After the full-scale Russian invasion of Ukraine, the BAI has never been higher than 50, although the index was slightly increasing from January 2023 to August 2023.
