Since the beginning of the year, domestic trade (wholesale and retail) that grew 7.5% yoy (+2.9% yoy 7M2017, +6.1% yoy 7M2018), transportation by 5.4% yoy (+4.4% 7M2017, +4.9% yoy 7M2018) and agriculture, forestry and fishing by 3.5% yoy (+2,7% 7M2017, +4.0% yoy 7M2018) contributed the most to the STEI. Industrial production grew by 2.7% yoy which is significantly lower comparing to 7M2017 (+7.7% yoy) and 7M2018 (+5.1% yoy). Since the beginning of the year, the growth rate in construction sector remains the highest compared to other components of STEI with 11.5% yoy (+0.7% yoy 7M2017, +1.3% yoy 7M2018). Telecommunication sector in January-July of this year made 2.6% yoy (+2.7% yoy 7M2017, +5.2% yoy 7M2018).
According to the Committee on Statistics of the Ministry of National Economy of Kazakhstan (the CS MNE), in January-July 2019, the volume of industrial output grew 2.7% yoy and amounted to T16.703 bn in current prices. According to our estimation, industrial production contributed 1.30pp and shared 48.2% of growth.
The growth dynamics of the mining industry and quarrying amounted to 2.4%.
Positive growth dynamics was recorded in the metal ores mining (+17.2% yoy) and technical services in the mining industry (+21.4% yoy). The growth rate of crude oil production in January-July 2019 was at the level of -1.3% yoy (+6.1% yoy in January-July 2018), and natural gas at 0.9% yoy (+6.4% yoy in January-July 2018).
According to the CS MNE, crude oil and natural gas output in January-July 2019 accounted for 52 242 thousand tons (52 938 thousand tons in January-July 2018). According to our calculations, crude oil and natural gas contribution to STEI in January-July 2019 is amounted to -0.26pp.
Output rate in manufacturing sector in the reporting period of 2019 made 3.2% yoy (+4.9% yoy in January-July 2018).
For the seven months of the current year, the most noticeable increase in production was observed in the light industry sector of 14.3% yoy (+1.5% yoy on 7M2018), in the beverage industry 15.1% yoy (-0,9% yoy 7M2018), textile products 18.3% yoy (+2.0% yoy 7M2018), manufacture of basic pharmaceutical products 18.0% (-1.6% yoy 7M2018). The most significant increase in production volumes was observed in the automotive industry 50.6% yoy (+58.5% yoy 7M2018) and in the manufacture of other vehicles 35.7% yoy (+4.6% yoy 7M2018). In general, the machine-building industry showed an increase in production volumes of 17.7% yoy (+16.0% yoy on 7M2018) for the seven months of this year.
The increase in production volumes of the metallurgical industry amounted to 1.6% (+3.6% yoy on 7M2018) due to ferrous metallurgy production cuts by 6.0% yoy (+4.8% yoy 7M2018) and an increase in the production of basic precious and non-ferrous metals by 8.1% yoy (+2.6% yoy 7M2018).
Domestic trade made 7.5% yoy in January-July 2019 with retail sales of 5.4% yoy (+5.6% yoy in January-July 2018), and wholesale 8.3% yoy (+6.2% yoy in January-July 2018). According to our calculations, trade contributed to the STEI 1.59pp in January-July 2019. According to our current estimate, the share of commodity sector in domestic trade (including wholesale and retail trade in oil and oil products, metals and products from them) is at least 70% of the total.
Transportation made a 0.71pp contribution in the STEI in January-July 2019 and amounted to 5.4% yoy (4.9% yoy January-July 2018). Positive dynamics of freight turnover was in air transportation (12.5% yoy), in automobile transportation (5.5% yoy). Railroad freight made 2.5% yoy. The sea transport in January-June of the year amounted to 74.7% yoy vs the same period of last year. In transportation by pipelines, freight turnover reduced by 0.6% yoy. Transportation of commodity sector products by all modes of transport, according to our estimates, is at least 75% of the total cargo transportation.
Gross output ofagriculture, forestry and fishing in January-July 2019 made 3.5% yoy (+4.0% yoy in January-July 2018). Cattle breeding output increased by 3.5% yoy while crop production increased by 4.4% yoy. Contribution of agriculture to the STEI in January-July 2019 amounted to 0.15pp.
Construction sector growth in January-July 2019 was 11.5% yoy (1.3% yoy January-July 2018). The contribution of construction to the STEI in the analyzed period was 0.61pp.
Telecommunication contributed the least to the STEI and made 0.03pp in January-July of the current year, evidencing the growth rate of 2.6% yoy (+5.2% yoy January-July 2018).
Fixed assets investments in January-July 2019, according to the preliminary data of the CS MNE, grew by 11.3% yoy (+23.7% yoy 7M2018). In nominal terms, investments in fixed assets reached T6.2348bn within the analyzed period.
Our opinion
According to the STEI, for the seven months of the current year the economy of Kazakhstan showed growth of 4.4% yoy (the best growth value). According to preliminary data, the country's GDP for the seven months of this year also amounted to 4.2% yoy (for the six months, growth was 4.1% yoy). Significant dynamics in the construction industry which in the first 7 months of this year reached 11.5% yoy due to an increase in housing construction and the construction of engineering facilities (roads, railways, tunnels, bridges, etc.), facilities for mining and manufacturing industries provides substantial growth support. The transport industry in January-July this year showed the best value of 5.4% yoy. Domestic trade reached a growth rate of 7.5% in seven months of this year. A slight increase is also observed in industrial production to 2.7% yoy. However, this is not the best result, since in January-March 2019 the growth in industrial production made 3.2%. Negative volumes of extraction of crude oil, iron ore and coal contribute to such results of industrial production growth.
