Kazakhstan reports increase in business activity

In February, Kazakhstan’s business activity index (BAI) grew by 0.4 points over the January rate, reaching 50 points. This data shows that the situation in the national economy is neutral, according to the National Bank. The index has been growing since the start of the year.

The BAI is an indicator of economic condition in the real sector.

The National Bank of Kazakhstan calculates the BAI by interviewing representatives from various companies to assess changes in the business environment. The changes are positive when the rate is higher than 50 and negative when it drops below 50.

In the service and production sectors, the rate has decreased from 50.7 to 50.3 points and from 50.4 to 50.1 points, respectively. Both industries reported changes in almost all components except for supply time frames. In the production sector, respondents complained of tax burden and poor protection of business. At the same time, they reported better access to communication, finances and lending facilities. The service sector has reported a similar situation.

In the mining industry and the construction sector, the rate has remained in the negative zone despite a minor increase to 48.4 and 49.2 points, respectively (45.9 and 47.2 points in January). Businesses involved in the mining industry said that access to infrastructure, finances and lending facilities has worsened along with the increased tax burden. However, they also reported higher demand for their products and services.

Business activity has improved in eight regions and worsened in nine. Astana reported the highest rate of the BAI (55.5 scores), while the Akmola region reported the lowest rate of 44.1 points. Evaluation of the current and future business conditions has also improved. The business climate index, which is an averaged evaluation of current and future business conditions, has reached 10.5 (9.1 in January), while the business cycle clock has gone into the growth zone. This indicator shows the current condition of the country’s economy.

Business activity in Kazakhstan has been decreasing from June to December 2023. It was at 51.1 by the summer of last year. However, the rate slipped to 50.7 by July due to a decrease in stocks and a lack of new products in the mining industry. The low volume of new construction and failures to meet the delivery date also contributed to this process. In November 2023, the BAI dropped by 0.6 points to 49 points and in December, the rate slipped by 0.3, reaching 48.7 points.

Over the period from late 2016 to the present, the lowest BAI was reported in April 2022 (37.3), when the vast majority of entrepreneurs couldn’t work because of COVID-19 restrictions. On the contrary, Kazakhstan reported its highest BAI in June 2017 and in April 2018 – 53.7 points.

No positive changes in business activity were reported in 2020. The BAI surpassed the bar of 50 points only in March 2021 but started to decline in September of that year. In December 2021 and in February 2022, Kazakhstan reported its BAI above 50 points. However, since the start of the war between Russia and Ukraine, the BAI has never been above that crucial mark. However, business activity was growing from September 2023 to June 2023.