Yuri Shokamanov, Master of Economic Science, Professor, and Executive Secretary of the Republic of Kazakhstan Statistics Agency
The analysis of major economic performance indicators in Kazakhstan over the last two and half years showed a trend of gradual decrease, which continued up to the first quarter of 2009. However, the second quarter was marked by some signs of stabilization, even with some growth in June. If the revival of economic activities continues in the second half of 2009, our country will likely finish the 2009 year out of recession.
The 2006–2009 major macroeconomic performance indicators showed that the situation worsened in 2007, when output in the real sector of the economy decreased, and a decline was reported also in the industrial and construction sectors (Table 1). Moreover, the rate of inflation rose more than twice. The GDP increased by 8.9% in 2007, compared to the 10.7% increase in 2006.
In 2008, the rate of economic growth reduced even more to 3.2%. In the first nine months of the last year, the rate of inflation was remaining at a level of more than 18%, compared to the same period of the previous year. The efforts to curb inflation brought fruit only in autumn, when the rate of inflation was down to 9.5%. So, in average terms, considering the year, the rate of inflation was 17.3%, and this led to reduction in the indicators of real wages and real income of the population.
As it is known, there is a practice that the calculation of GDP is always made with an apparent lateness. Thus, the evaluation of the situation with economic growth (recession) is made, as a rule, on the basis of the short-term economic indicator. The latter one is calculated, based on the performance indicators reported on the six basic sectors of the economy. They are agriculture, industry, construction, trade, transport, and communication, which make together 67–68% of the overall GDP volume. In the first half of 2009, this indicator was 94.7%. Considering the indicators reported over the last months, some positive changes on the GDP index are likely to be expected, based on the half year results. The said indicator was reported at 97.8% after the first quarter of 2009 ended.
Industry: The decisive contribution by the industrial sector to the economy of the country, while its share in GDP is some 30%, defines synchronic change in the short-term economic indicator with the industrial output physical volume performance index.
The industrial output physical volume indices were decreasing as early as in May of 2007 (Table 2). While from January through April of 2009, if to compare every above-said month with the relevant month of 2006, they remained at a level of some 110%, in May-September they did not exceed 103%, and even a 2.4% decline in production was reported in July.
Throughout 2008, despite a short-term production increase in November and December of 2007, the industrial output physical volume indices did not exceed the value of 105.2% achieved in May. Moreover, in November and December of 2008 and in January-May of
In February of 2007, there was observed a decline in the mining sector, and in May of the same year the decline reached 1.2%. Later on, fluctuations in production were comparable to the previous year’s level.
In the first half of 2008, the rate of production increased slightly, ranging between 104.6% (in April) and 109.6% (in March). However, starting in the second half of the year, the situation began changing for the worse which led to a decline in production in February, March, and May of 2009. This resulted from decreased external demand owing to the world financial crisis. Nevertheless, in June of the current year a remarkable increase of 11.3% was reported. All this gives hope that the situation will change for the better.
On the whole, in the first half of 2009, the rate of production in the mining sector was by 1.8% more than the previous year’s level.
After January of 2007, the rate of production in the processing industry decreased considerably and became unsteady. Over the nine months of 2008, there was a marked decline in production that reached 16.3% in December. In January-May of 2009, the decline ranged between 9% and 13.5%, while in June a 0.8% increase was reported. In the first half of the year, the overall decline in production in the processing industry reached 9.5%. In the structure of the sectors of the processing industry, the production of foodstuff including beverages (-3.4%) suffered much less than the other sectors. Foodstuff production is one forth of the overall productions of the processing industry. The greatest decline was in the chemical industry (-24.5%), which covers a 3.3% share in the overall production of the industry. Metallurgical production, the largest sector of the processing industry (38.6%), is down by 10.1%, while the machine-building sector (9.1%) was down by 21.8%.
Agriculture: Despite having a minor share in the GDP’s structure of just 2.7%, the agricultural sector, including hunting, forestry, fishing, and fishery, plays an important role in social life, based on the results of the first quarter of 2009. This is because more than 30% of the total population of the country engages in this sector. Besides, safety issues related to provision of the country with foodstuff depend on efficient operation of this sector, since the Kazakhstan market of various foodstuffs depends heavily on domestic production. Along with that, the stock of some foodstuffs is formed due to imports. This is, for example, poultry, 59.9% of which is imported from abroad and canned fish (56.5%). Flour, on the contrary, is exported (65%).
Investments in fixed capital: The amount of investments in fixed capital in 2007 was much bigger than the previous year’s level, especially in May-October. However, in November-December it reduced to some extent. In early 2008, again a considerable increase in investments was reported. Nevertheless, starting from June, the investments were down to the zero level and even less in November and December.
So, the situation in the first half of the year 2009 looked as below. The amount of capital investments was down by 13.9% in January and by 5.6% in February than the previous year’s level. However, already in March a 2.2% increase was reported, while in April it reached already 36.9% that was a result of unexampled investments in the economy by the state. In the subsequent months, the increase was much lesser, compared to the previous year’s level.
Construction: The performance indicators in this sector were sharply down in August of 2007. The rate of construction reduced from 125% in June to 83.3% in September, compared to the same months of 2006. Further on, they increased, but slightly throughout the second half of 2008, except for October, when they were less than 100%.
In January of 2009, the scope of construction works was only 82.7% of the previous year’s level, and in February it was 94.6%. In March, this indicator was up again, exceeding the 2008 year level by 10.1%. However, in April, despite about a 1.5 times increase, compared to the previous month (+46.9%), it was 15.2% lower than in April of
For the first time, a considerable decline of 90.5% in the launching of residential buildings for occupation as reported in September of 2007, compared to 119.1% in August. Then the decline went on in the subsequent months. While in January of 2008 it was as usual, at the high level of 130.7%, further on, it sharply dropped down to 79.3% in April. They managed to overcome this negative trend in the second half of 2008, when the rate of launching residential buildings for occupation increased.
In 2009, the given indicator was reported as unstable. Thus, in January it was one third less than the previous year’s level, while in February it was already one fifth more. In March, the launching of residential buildings for occupation was at about the previous year’s level (99.1%), while in April of 2009 it was one forth up on April of
Retail trade: Indices of physical volume of retail trade throughout 2007 were at a relatively high level, with an average increase of 10.1%. This correlates well with the real income of the population, which increased by 19.3% in average per month than the previous year’s level.
In 2008, the retail turnover in real terms was in average just 3.6% more than the 2007 level that also conforms to the real income of the population, which increased by only 3.3%.
In January of 2009, the retail turnover was 0.1% less than the previous year’s level, and then a trend of gradual decline up to 84.5% in June was reported.
Inflation, real income, and wages: Inflation gradually increased as early as in the second half of 2007, reported at 18.8% at the end of year. In the eight months of 2008, it was at a level of 18.7–20.1%, compared to the relevant months of 2007, after which it started to decline, having reached 9.5% in December. In January–April of 2009, inflation remained at a level of 8.7–8.9%, and then it gradually decreased to 7.6% in June. In average, in the first half of 2009 it was 8.5%.
As a result of the high rate of inflation, the real income of the population in 2008 increased by only 3.3%, while in 2007 the increase was 18.9%. Regarding wages, a 16.1% increase in 2007 changed for a 2.5% decrease in 2008.
In the first half of the current year, real income and real wages of the population rose by 3.8% and 3.2%, respectively. This can be explained by the low inflation rate.
Labor market: The number of employed in the second quarter of 2009 was 7,896,600 people that is a 0.8% increase in that of the first quarter of 2009 and a 0.4% increase in that of the second quarter of 2008. The number of unemployed in June of 2009, according to calculations made by using the method of International Organization for Labor, was 559,200 people, or 6.6% of the economically active population. The employment agencies of the Ministry of Labor and Social Protection registered 92,800 people unemployed (1.1%).