Economic growth accelerated in 1Q25, the NBK keeps base rate unchanged

KAZAKHSTAN - In Brief 15 Apr 2025 by Evgeny Gavrilenkov

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The National Bank of Kazakhstan kept its base rate unchanged at 16.5%, which looks unsurprising given that y-o-y inflation climbed to 10.0% in March amid m-o-m inflation at 1.3%-1.5% in the past two months. The NBK chairman, Mr. Suleimenov, quoted high inflation expectations as one of the main reasons for not cutting the base rate. He also referred to elevated inflation in Russia as Kazakhstan’s important trade partner that supplies the country with about 30% of its total imports. Mr. Suleimenov also quoted global economic uncertainty as encouraging observers to remain cautious. In addition, the NBK chairman referred to accelerated economic growth in Kazakhstan. According to him the country’s economy grew by 5.8% y-o-y in 1Q25, i.e., faster than in 2024 (4.8%). Even though quarterly GDP growth was uneven in 2024, the 1Q25 growth figure looks high and not entirely expected. Meanwhile, the Bureau of National Statistics reported that the short-term indicator (a monthly proxy of combined economic activity in industry, agriculture, construction, trade, transportation/warehousing, and IT/communications) grew by 8.3% y-o-y in 1Q25. In March alone, its y-o-y growth was even higher (9.9%). Transportation/warehousing was the fastest growing segment in 1Q25, as it was up by 21.0% y-o-y. Construction grew by 16.9%, trade expanded by 6.3%. Industrial growth looked quite impressive. Recently published y-o-y growth numbers looked very volatile and rather unexpected. Interestingly, the NBK recently published its regular macroeconomic survey, and experts downgraded their 2025 GDP growth forecast to 4.7%. In a few days, a complete set of monthly economic indicators will be available, an...