Decline of the foreign trade turnover of Kazakhstan hits new records

Almaty. January 6. KazTAG - Sergey Zelepukhin. At the end of the year there is a tradition to sum up the results. At this time, it makes sense to evaluate the preliminary results of foreign trade operations in Kazakhstan, because it reflects the prevailing trends in the economy. And I must say that these results are not optimistic. Despite a double growth of oil prices since late January, the volume of foreign trade continued showing declination for most of the year.
In turn, decline of the state's foreign trade turnover makes a negative impact on the balance of payments. As a result, the deficit of the account of current operations does not allow the national currency to strengthen more significantly.

Smaller surplus

The indexes of the statistics agency of the Ministry of national economy  indicate the fact that the foreign trade of Kazakhstan is in deep crisis. According to the statistics committee for the first nine months of this year, the foreign trade turnover of Kazakhstan fell by $ 15.5 billion or 26.2% to $ 43.8 billion from $ 59.4 billion for the same period in 2015.

During the reported period of time Kazakhstan's exports fell by 27% or $ 9.7 billion to $ 26.2 billion from $ 35.9 billion a year earlier. However, imports also declines, but it was not so high  in comparison to exports. Import of goods and services in Kazakhstan decreased by 24.9% or $ 5.8 billion to $ 17.6 billion from $ 23.4 billion. As a result, trade surplus in January-September decreased by $ 3.8 billion to $ 8.6 billion from $ 12.4 bln this year compared to the same period of 2015. There has been decline of foreign trade of Kazakhstan for the third year in a row. The index fell from $133.5 bn to $119.5 bn, or by 10.5% in 2014 compared to 2013.
In 2015th the situation became worse. Decline of foreign trade volume this year compared to the 2014th was one of the worst since the beginning of the XX century and reached 37.1%. As a result, the foreign trade of the state declined by $ 43.6 billion from $ 119.5 billion to $ 75.9 billion. Thus, only for 2014-2015 the volume of foreign trade operations declined by an impressive $ 57.6 billion, or by almost 2 times.
In fact, at the beginning of 2016 the volume of foreign trade activities of the state was comparable with the indicator of the crisis year of 2009. According to the National Bank, then it was $ 72.8 billion,  $ 37.5 billion down in comparison to  $ 110.3 billion in 2008.
But the most alarming thing is that the decline in foreign trade continues. And this happens despite the fact that from 2014 until 2016, there were four landslide devaluations in Kazakhstan. As you know, their success in terms of  macroeconomic position is measured by  positive changes in foreign trade in favor of exports. However, judging from the results of the first nine months of this year, there is a reason to doubt about their effectiveness.

From recession to recession

Perhaps the only positive thing for the devaluation of the economy lies only in the fact that in the first three quarters of 2016 the foreign trade balance was still in positive area.
At the same time the reduction of this figure has beaten record after record. According to the National Bank, in I quarter 2014 the surplus in foreign trade in goods reached $ 14.3 billion, in Q1 2015 - it was already more than 3 times less - $ 4.2 billion, in Q1 2016 - only $ 2.7 billion.
A similar picture emerges for other quarters of 2014-2016's. In the II quarter of 2014 the balance of trade was $ 8.4 billion compared to $ 14.3 billion - in the I, in the III quarter it was even less - $ 7.8 billion in the IV quarter -it was  $ 6.1 billion. In 2015 the negative trend  intensified: in II quarter the trade balance fell to $ 3.3 billion against $ 4.2 billion - in the I quarter, in the III quarter it was $ 2.8 billion, and in the IV quarter it was altogether $ 2.2 billion.
But the most negative quarterly record for this indicator was set in April-June this year. During this period, the trade balance reduced to $ 1.9 billion.
For completeness, it should be noted that in July-September, the situation improved: during this period, according to preliminary estimates of the National Bank, the balance of trade was $ 2.5 billion resulting in a positive balance of foreign trade in goods in Kazakhstan which decreased from $ 36.7 billion in 2014 to $ 12.6 billion in 2015, or nearly by 66%.
The situation is even worse, if we evaluate the republic's foreign trade not only in goods or in services where traditionally Kazakhstan  has negative results. If at the end of 2014 the figure was $ 30.4 billion, by the end of 2015  it was $ 7.2 billion.

Tenge follows the oil price

Therefore there is no surprise that the account balance of payments on current operations went from the surplus in 2014 into the red zone in the 2015 and 2016. While  the figure was $ 6.4 billion in 2014, it was $ 5.8 billion in 2015 with the sign "-", and for the first nine months of 2016, according to preliminary estimates of the National Bank - minus $ 5.2 billion or 3.9% of GDP compared to minus $ 3.8 billion for the same period in 2015. Thus, the current account deficit during the reported period of time grew by more than 20%. These data show why tenge is still under pressure and can not be significantly strengthened against the US dollar. This strong support from the national currency has further weakening of the financial account balance of payments, particularly on articles - direct investment and medium- and long-term loans. According to the National Bank, in the first three quarters of 2016 the net inflow of direct foreign investments amounted to $ 12.1 billion, and the total - $ 14.6 billion against $ 5 billion in the same period last year. This increase was the result of inter-company loans and medium- and long-term loans to the public and corporate sectors. In July-September this year there was fixed a record over the past few years, the quarterly rate of investments in Kazakhstan of foreign direct investment made $ 6.4 billion, primarily due to implementation of the major oil projects Kashagan, Tengiz and Karachaganak. In this situation, against the backdrop of oil prices from historical lows, accumulated over the past three years, the devaluation of the national currency decreased. According to the National Bank, since the beginning of 2014 until the end of September 2016 the strengthening of the dollar rate against tenge amounted to 43.5%. At the same time for January-September tenge depreciated against the US dollar by 1.5%. Tenge weakened against euro and Russian ruble: since the beginning of 2014 till the end of September 2016 the rate of devaluation amounted to 29.8% and 9.3%, and for the first nine months of 2016- 4.3%, and 7, 5%, respectively. According to official data on foreign trade and with the current oil price at $ 50 + / - $ 5 per barrel, we can conclude that the national currency exchange rate is still experiencing a negative impact from the balance of payments deficit on current account, yet it stays within 330 - 350 tenge per $ 1 ", says economist Slyam Akhmetov.
According to  Investment Halyk Finance, in 2016 the balance of payments deficit on current account transactions will grow to 4.1% of GDP against 3% in 2015. Improvement of the balance of the current account, according to our expectations will be slow, primarily due to slow recovery in oil prices (70% of exports), while  potentials for further reduction in imports seems limited due to the need of  use of the imported investment goods," - said the research of the  investment company. So we can only hope that the year of the rooster will be better for the foreign trade operations in Kazakhstan.