The growth of consumer activity due to the removal of quarantine and the strengthening of tenge helped to move trade towards recovery
After the April decline of 41.4% compared with March, retail sales turned to a quick recovery in May with an increase of 34.2% mom. The depth of the fall in trade volumes in April was comparable to the seasonal decline in sales in January, which amounted to 45.1% in monthly terms. Thus, we can say that this year the trade sector experienced two months of sales decline instead of the usual one. Relative to March, sales in April and May were almost a third lower. The trade turnover in April amounted to just T496bn and was the lowest since the beginning of 2016, when oil prices were also at their lows - just above $30 per barrel. Note that the main contribution to the drop in sales in April was due to a decrease in sales of non-food products, which fell by more than half from March, while sales of food products decreased by only 19%. Considering that quarantine began to be lifted after May 10, the recovery growth in trade turnover will be noticeably expressed in trade statistics for June as well. In annual terms, the depth of the decline in trade turnover in May decreased to 30.8% compared with 44.7% in April. In general, over five months the drop in retail sales is even more modest -16.2% yoy.
Strengthening tenge was an important driver of restoring trade: in May, the national currency strengthened by 4% against the US dollar. However, in May, the tenge exchange rate against remained almost unchanged in May, having decreased by 6% since the beginning of the year, as a result of which we can speak of a generally neutral effect of changes in the exchange rate on the sphere of trade in the first five months of this year. In addition, the currencies of developing countries have also fallen against the dollar by about 6% since the beginning of this year. Accordingly, the pressure on inflation from the weakening tenge should be minimal. A moderate increase in prices is favorable for trade in the conditions when the economy of Kazakhstan for the first time in more than 20 years enters into recession - the reduction in GDP in January-May amounted to 1.7% compared to the same period last year.
