Bloomberg reported that Kazakhstan economy probably grew at the slowest pace in more than two years as deteriorating global demand eroded sales of its commodities exports.

Gross domestic product expanded 5.2% in the first half from a year earlier down from a 5.6% advance in the first quarter. The State Statistics Agency in Astana is scheduled to release GDP figures by August 16.

Slowing economic growth in China and Russia, Kazakhstan’s largest trade partners and the deepening European debt crisis are testing the resilience of the biggest energy producer in central Asia. The government of President Mr Nursultan Nazarbayev is counting on domestic consumption to balance shrinking export revenue as it targets growth of about 7% this year and seeks to safeguard that pace of expansion until 2015.

Mr Vladimir Tikhomirov and Mr Polina Badasen analysts at Moscow based Otkritie Financial Corp said “With weak external demand likely to exert a significant drag on industrial output and a weaker projected agricultural harvest, GDP dynamics are likely to moderate. The Kazakh economy is reasonably well positioned for withstanding a global economic slowdown, as domestic consumer demand should remain robust.”

Kazakh industrial output unexpectedly shrank in July for a second month as production of metals slumped dropping 0.5%YoY after a 1.7% decrease in June. Production fell 3.5% in July on a monthly basis.

Kazakhstan doesn’t have outstanding foreign-currency bonds after redeeming its last notes in 2007, so investors speculate on its creditworthiness by trading credit-default swaps. The cost of protecting Kazakh debt against nonpayment for five years using CDS dropped 118 basis points from this year’s high in January to 199 in London yesterday.

Source - Bloomberg

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