Economy News in Brief

Kazakhstan is having a record year for investments in environmental protection, finprom.kz reports. During the first 10 months of 2018, 61.1 billion tenge (US$163.55 million) has been invested, almost three times more than was invested last year. More attention has been paid to environmentally friendly public transport – in one pilot programme, Kazakhstan in cooperation with the Organisation for Economic Cooperation and Development (OECD) prepared a plan to replace 300 old buses with modern ones running on clean fuels in Shymkent and Kostanai. The total value of investments will be US$29 million. Later, they plan to involve more cities and replace up to 2,800 buses, with investments in the wider project estimated to reach $276 million. Over the next two years, they also plan to construct solar, biogas and four hydroelectric power stations.

At the end of the first half of 2018, 31.2 percent of all investment flows into Kazakhstan’s transport infrastructure sector came from Chinese investors, making China the largest investor in Kazakhstan. Most transport infrastructure projects are linked to Beijing’s Belt and Road Initiative. The total number of Kazakh-Chinese investment projects is 51, with a value of around $27 billion. Chinese investment for 2018-2019 will launch 11 projects worth $4.4 billion. This will create approximately 20,000 new permanent jobs. Over the last three years, there has been linear growth in investment flows from China, reaching the level of 6.6 percent. In 2018, the main instrument of Chinese investors for the first time was direct investment, which at the end of the first half of the year amounted to $9.5 billion – 60.3 percent of all investments during the year.

Domestic banks need external loans to support the growth of Kazakhstan’s economy, according to finprom.kz. Over the last 10 years, the volume of foreign bank loans has decreased eight-fold, from $45.9 billion to $6.1 billion. Over the same period, the ratio of bank loans to gross domestic product fell twice to 24.6 percent. Corporate lending over the past five years has grown by only 1 percent; the alternative is the stock market and international capital. In the medium term, banks will continue to reduce their scale of funding the economy. The lack of a long-term resource base has forced banks to target the retail lending segment. Thus, over the past five years, the share of loans to individuals increased from 31.9 percent to 40.5 percent.

At the beginning of November, the subsistence minimum in Kazakhstan increased by 11.2 percent to 28,600 tenge (US$76.60), while prices of goods and services increased by 5.3 percent year to year. According to a new system for calculating a subsistence minimum, non-food items and paid services amount to 45 percent of the total. At the end of October it amounted to 12,900 tenge (US$34.50). Now, the share of food products occupies only 55 percent of the subsistence minimum, which amounted to 15,700 tenge (US$42).

The poverty level in Kazakhstan has dropped over the past two decades, falling from 34.6 percent in 1996 to 4.7 percent in the first half of 2018. Experts, however, note that while gross domestic product is increasing, the real incomes of the population have not increased, kapital.kz reports. Between 2015 and 2017, real wages of the population decreased by 3 percent, while real economic growth exceeded 6 percent. The discrepancy in the indicators is explained by the commodity model of the domestic economy, where the demand for labour largely depends on inefficient services. Analysis of the average monthly wage in 2017 showed that the maximum wage was in the mining and quarrying industry, at 341,775 tenge (US$914.9). Wages in the processing industry and agriculture were about half as much, at 166,739 tenge (US$446.30) and 91,084 tenge (US$243.80) respectively.