Analysts cast doubt on cabinet’s plan for economic growth

Experts of Halyk Finance have cast doubt on the government’s plan to reach economic growth at 6% this year; the plan was announced at a cabinet meeting recently. The experts point out low labor efficiency and the huge role of the government in the country’s economy.

In January, economic growth slowed to 3.9% year-on-year as many industries reported a decline, as Minister of National Economy Nurlan Baibazarov said in mid-February. In 2023, Kazakhstan’s economy grew by 5.1%.

«At the end of last year, we injected the economy with cash from the National Fund but the positive effect didn’t last long. In January 2024, we also used transfers of significant amounts of money from the fund. Despite the economic recession, the government has even improved its forecast for GDP growth to 6% this year. We believe that these forecasts are overly optimistic as they rely on extensive growth of economic sectors while external and internal demand lacks a solid foundation for growth,» Halyk Finance analysts said.

Last month, only the transportation and telecommunication sectors reported double-digit growth. Oil output also slightly grew (0.2%) year-on-year, while showing a 2% decline month-on-month. The agricultural sector has also shown a minor growth of 0.4% year-on-year. Investments in fixed capital grew by 0.6%, whereas the overall amount of investments surpassed $39.8 billion as of late 2023, showing a 13.7% increase over the same rate in 2022.

The trading sector reported a slowdown to 3.5% after robust growth last year. From January to May 2023, this sector grew by 10%. The industrial manufacturing growth slowed to 3.4% year-on-year.

In addition, the World Bank’s projection for Kazakhstan’s economy is much lower than the forecast of the country’s government. The international institution predicts the country’s GDP to grow by 3.4% this year driven by the non-oil sector.