In the first half of 2011 the major macroeconomic performance indicators in Kazakhstan showed positive trends, which is a promising sign for repeat of the 7.3 % growth achieved in the domestic economy in 2010.
The short-term economic indicator, characterizing the dynamics in the six major sectors of the economy (agriculture, industry, construction, trade, transport and communication), recorded a 6.8 % growth in production volumes, compared with the same period of last year1.
1. See the website of the Republic of Kazakhstan Agency for Statistics http://www.stat.kz/publishing/ /2011/июнь/Статистика июнь_интерактив.pdf, Pages 70–72.
According to the Customs Control Committee under the Finance Ministry, the foreign trade turnover in January–May was 40 % higher than in the same period of last year. Budget revenues as of June 1 increased by 20.4 %, while expenditures by 15.3 %.
Inflation was at a level somewhat higher than projected – 8.4 % in the first half of 2010. At the same time real wages and real income of the population increased by 6.6 % and 6.1 %, respectively (compared to May of last year).
Overall socio-economic situation in the CIS
According to the CIS Interstate Statistical Committee (Table 1), a 4.6 % economic growth was recorded in the Commonwealth states in the first quarter 2011, including the Customs Union countries: a 4.1 % growth in Russia, 11 % (January–May) in Belarus, and 6.8 % inKazakhstan.
In the first half of 2011, industrial output in the CIS grew by 6 % (by 5.3 % in Russia, by 11.5 % in Belarus, and by 5.8 % in Kazakhstan), the freight turnover by transport enterprises, excluding transportation by pipelines increased by 11.5 % (by 5.9 % in Russia, by 12.7 % in Belarus, and by 19.9 % in Kazakhstan), while retail trade grew by 6.9 % (by 5,3 % in Russia, by 18.4 % in Belarus, and by 12 % in Kazakhstan). Investment in fixed assets within the CIS countries increased by 4.9 % in general, (by 2.7 % in Russia, by 27.6 % in Belarus, and by 0.1 % in Kazakhstan).
Exports of goods within the CIS in the first five months increased by 33 %, compared to the same period of 2010 (by 28.5 % in Russia, by 61.2 % in Belarus, and by 44.3 % in Kazakhstan) and imports by 47,7 % (by 48.6 % in Russia, by 56.7 % in Belarus, and by 30 % in Kazakhstan).
Producer price indices of industrial production in the first half of 2011 were on average 11.6 % higher than in January–June last year. Along with that, for certain countries of the CIS, their dynamics still differ greatly, in particular, in Russia, where they grew by just 7.9 %, while in Belarus by 48.4 %, and in Kazakhstan by 20.7 %.
Consumer prices increased by 6.4 % compared to December 2010, including in Russia by 5 %, in Belarus by 36.2 %, and in Kazakhstan by 5.1 %.
According to current data, Kazakhstan’s GDP in the first half of 2011 increased by 7.1 % compared to the same period of the previous year (Table 2). In agriculture, industry, construction, trade, transport and communications, which account for two thirds of GDP, the growth in real terms was 6.8 %.
In the industry, which constitutes one third of GDP, production volumes rose by 5.8 %, including in the mining industry by 4.1 % and in the process industry by 8.7 %. Slight growth was observed in the construction sector and agriculture by 1.7 % and 1.5 %, respectively. The trade performance indicators increased by 14.3 %, including a 12 % growth in retail sector. Work volumes in the transport and warehousing sectors increased by 6.5 %, while in the information and communication sectors increased by 16.5 %.
In July 2011 the Agency for Statistics published express information on the composite leading indicator of the industry (CLII), allowing foreseeing early signals of turning points in the cycles of the physical volume index (PVI) of the industry (Figure 1). The CLII’s structure comprises the market survey questionnaire indexes (the balance of estimates of the industrial enterprises indicators, involving the expected output, demand and number of employed in industrial enterprises in the next 2–3 months), and the monetary aggregate M1.
Based on the results of the estimate made, it is predicted that due to the increase in CLII during the period from September 2010 to June 2011, the PVI will start rising with a long-term trend in the next 1–2 months.
The industrial production growth rate in the first half of 2011 was comparatively lower (105.8 %) than in 2010, which is associated with the relatively high base of last year (109.6 %). As Table 3 shows, there is an unstable dynamics of the physical volume indices by separate months; however, taking into consideration the results on SLII, one should expect an increase in this indicator.
Mining and quarrying in the first half showed an increase in production volumes by 4.1 %, including an increase of 7.6 % in output of coal and lignite, 6.9 % of natural gas, 3.5 % of crude oil, 1.6 % of iron ore, and 1.4 % of non-ferrous metals.
Processing industryshowed a 8.7 % rise. Production of food and beverages, non-metallic mineral products, and products of ferrous and nonferrous metallurgy increased. A rise in production in mechanical engineering (26.4 %) and chemicals production (17.5 %) was the most considerable.
Volumes of electric power generation and distribution of gas, steam and air conditioning rose by 6.8 %. This was due to the increase in production and distribution of gaseous fuels (20.2 %), steam and air conditioning (+9.3 %), as well as generation, transmission and distribution of electric power (+5.5 %).
In water supply, sewerage systems, and controlof waste collection and disposal the physical volume index was 97.6 %in January–June 2011.
Agricultural output in the first half of 2011 rose by 1.5 %, while crop production volumes remained at the same level as in the previous year, and livestock farming demonstrated a 1.5 % increase. In particular, the number of sheep increased by 4.4 %, while horses by 6.5 %. At the same time, cattle reduced by 3.8 %, goats by 2 %, pigs by 4.1 %, and fowls by 2.4 %.
Construction in the first half of the year was at a level higher than the previous year’s level by 1.7 %. The highest growth rates (compared to the same month of the previous year) were recorded in February, June and January – 105.3 %, 102.9 %, and 102.2 %, respectively. In the other months they were below 100 %.
In the first half of the year 2,658 thousand m2 of residential buildings were commissioned into operation, which is by 1.2 % less than in 2010. Along with that, we have to note a significant increase in investment in residential construction by 24.1 %, which in prospect is seen to add to the increased rate of commissioning of housing into operation.
In the first half of the year retail turnover increased by 12 %. At the same time, retail turnover of trading companies (the share of which in the total retail trade is 53.4 %) rose by 7.1 % and that of sole entrepreneurs and retail turnover in the markets rose by 18.3 %. Inventories as of July 1st were sufficient to trade them during 43 days.
Foreign trade turnover
In January–May 2011 the foreign trade volume reached $48.3 billion, a 40 % increase, compared to the same period of last year. The exports were $34.9 billion (+44.3 %) and imports $13.4 billion (+30 %).
Exports to the Customs Union countries reached $3,551.7 million, which is a 60.4 % increase, compared to January–June 2010. At the same time, imports from the Customs Union rose by 40.3 % to $891.5 million.
The major partner countries of Kazakhstan in exports are China (15.8 % of total exports), Italy (14.3 %), Russia (10 %), Netherlands (8.7 %), and Switzerland (6.4 %). In imports the leaders are Russia (42.7 %), China (12 %), Ukraine (5.2 %), Germany (4.9 %), and USA (4 %).
Balance of payments
The current account surplus in the balance of payments for the first quarter of 2011 was positive – +$4,388.3 million (for comparison, in the first quarter of 2010 it was +$2,776.6 million).
Surplus on transactions with direct investments was +$2,770 million (in January–March 2010 it was +$3,390.6 million), including direct investments overseas -$1,443.2 million, and in Kazakhstan +$4,213.2 million.
Surplus on transactions with portfolio investments declined to +$308 million (in the first quarter 2010 it was +$ 3,914.6 million).
Investment in fixed assets
In the first half of the year investments in fixed assets were approximately the same level of the previous year (a 0.1 % increase), amounting to 1,869.5 billion tenge. The investment structure by sources of financing did not change greatly: the own funds share is 46.4 % (45.9 %in 2011), of foreign investments 26.2 % (27.6 %), of state budget funds 17.6 % (19.1 %), and of borrowing funds 9.8 % (7.4 %).
Mining and quarrying remained the most attractive industries for investments, as before, whose share in total volume is 38.5 %. Then it follows transportation and warehousing – 14.2 %, also transactions with real estate – 11.3 %.
Inflation, real income and wages
The consumer price index, compared to the first half of 2010, was 8.4 %. Along with that, real income and wages grew by 6.1 % and 6.6 %, respectively, compared to the same period of last year.
In the first quarter of 2011 the average pension grew by 24.5 % to 26,580 tenge.
Per capita nominal income of the population in May 2011 was 43,316 tenge, growing by 11.4 %, compared to May of last year, and by 2.9 % in real terms.
The average monthly nominal wage per employee in May 2011 reached 84,116 tenge (12.5 %), a 3.8 % increase in real terms.
According to preliminary data, the number of the economically active population in the second quarter of 2011 amounted to 8,671.4 thousand, a 0.6 % increase, compared to the same period of last year.
The number of employed reached 8,204.4 thousand (+1.1 %). At the same time, there was an increase in the number of employees by 2.1 % (5,496.7 thousand people) and a decrease in the number of self-employed by 0.9 % (2,707.7 thousand).
The number of unemployed, on the contrary, declined by 7.3 % to 467 thousand people. It is worth noting a relatively marked decline in the unemployment rate up to 5.3 % in June this year, against 5.7 % in June 2010. The level of latent unemployment, according to the Agency for Statistics, was 0.4 %.
According to the Ministry of Labour and Social Welfare, the number of people registered as unemployed in June 2011 amounted to 57.4 thousand, or 0.7 % of the total economically active population.
As of July 1st, the population of Kazakhstan has grown by 0.6 % to 16.5 million people in comparison with the beginning of the year. In the first five months of 2011, 152.7 thousand people were born in the country (150.3 thousand in January–May last year), and 63.5 thousand died (against 61.3 thousand in the same period last year). During the said period 14.7 thousand people (against 14.4 thousand in last year) came to Kazakhstan for permanent residence, while those who moved to other countries from Kazakhstan numbered 9.5 thousand people (against 8.3 thousand in 2010). The main migration exchange occurs within the CIS countries, accounting for 93.5 % of emigrants and 76.9 % of immigrants.
The mortality rate from circulatory diseases, which is the main cause of death in our country, as in the previous years, continued to decline, reaching 43 % (against 46.1 % in the same period of 2010). In addition, the specific weight of the deceased because of tumors reduced to 11.5 % (against 12.2 % in last year), as well as because of accidents, poisonings and injuries to 11 % (against 11.6 % in last year).
State budget revenue as of June 1, 2011 reached 2,066.5 billion tenge, a 20.4 % increase against the same period last year. At the same time, tax revenues, whose share in total public revenues is 79 %, increased by 46 %.
In particular, budget revenues from taxes on foreign trade and external transactions, whose share in overall tax revenues is 21 %, rose by 4.2 times. Besides, revenues from corporate income tax increased by 25.2 % (its share in the structure is 26.1 %) and from value added tax and individual income tax by 24 % and 19.1 %, respectively (with shares equal to 21.5 % and 8.9 %, respectively).
As for the expenditure in the state budget in January–May 2011, it rose by 15.3 % to 1 875.1 billion tenge. The budget deficit was at the level of 71.8 billion tenge.
Yuri Shokamanov, PhD in economics, Professor, National Accounts Department Director at the Agency of the Republic of Kazakhstan for Statistics KAZAKHSTAN International Business Magazine №4, 2011