STEI in January–August 2019 made 4.8% yoy

Dmitriy SheikinSeptember 18, 2019

In January-August 2019, the STEI reached 4.8% yoy, which is lower than in 2017 (5.8% yoy) and higher than that in 2018 (4.5% yoy) for the same period.

Since the beginning of the year, domestic trade (wholesale and retail) that grew 7.6% yoy (+2.9% yoy 8M2017, +5.8% yoy 8M2018), transportation by 5.5% yoy (+4.7% 8M2017, +4.8% yoy 8M2018) and agriculture by 3.6% yoy (+1,9% 8M2017, +2.4% yoy 8M2018) contributed the most to the STEI. Industrial production grew by 3.2% yoy which is significantly lower comparing to 8M2017 (+8.5% yoy) and 8M2018 (+4.7% yoy). Since the beginning of the year, the growth rate in construction sector remains the highest compared to other components of STEI with 11.8% yoy (+0.1% yoy 8M2017, +0.8% yoy 8M2018). Telecommunication sector in January-August of this year made 2.6% yoy (+2.9% yoy 8M2017, +4.5% yoy 8M2018).

In January-July 2019, industrial output grew 3.2% yoy and amounted to T19,052 bn in current prices. According to our estimation, industrial production contributed 1.52pp and shared 47.3% of growth. 

  STEI_August_2019_original.png

The growth dynamics of the mining industry and quarrying amounted to 3.1%.
Growth was recorded in the metal ores mining (+17.9% yoy) and technical services in the mining industry (+19.2% yoy). The growth rate of crude oil production in January-August 2019 was at the level of -0.4% yoy (+6.1% yoy in January-August 2018), and natural gas at 1.8% yoy (+5.9% yoy in January-August 2018).

According to the CS MNE, crude oil and natural gas output in January-August 2019 accounted for 59 787 thousand tons (59 980 thousand tons in January-August 2018). According to our calculations, crude oil and natural gas contribution to STEI in January-August 2019 is amounted to -0.06pp.

Output rate in manufacturing sector in the reporting period of 2019 made 3.3% yoy (+4.8% yoy in January-August 2018).

For eight months of the current year, the most noticeable increase in production was observed in the light industry sector of 17.4% yoy (+1.6% yoy in 8M2018), in the beverage industry 15.2% yoy (-0,8% yoy 8M2018), textile products 22.3% yoy (+2.1% yoy 8M2018), manufacture of basic pharmaceutical products 13.8% (-2.5% yoy 8M2018). The most significant increase in production volumes was observed in the automotive industry 56.5% yoy (+50.1% yoy 8M2018).

In general, the machine-building industry showed an increase in production volumes of 18.0% yoy (+13.8% yoy on 8M2018) for the eight months of this year. The increase in production of the metallurgical industry amounted to 1.7% (+4.1% yoy on 8M2018) due to ferrous metallurgy production cuts by 5.3% yoy (+4.8% yoy 8M2018) and an increase in the production of basic precious and non-ferrous metals by 7.8% yoy (+3.5% yoy 8M2018).

Domestic trade made 7.6% yoy in January-August 2019 with retail sales of 5.5% yoy (+6.5 % yoy in January-July 2018), and wholesale 8.5% yoy (+5.4% yoy in January-August 2018). According to our calculations, trade contributed to the STEI 1.69pp in January-August 2019.

Transportation made a 0.72pp contribution in the STEI in January-August 2019 and amounted to 5.5% yoy (4.8% yoy January-August 2018).

Gross output of agriculture in January-August 2019 made 3.6% yoy (+2.4% yoy in January-August 2018). Contribution of agriculture to the STEI in January-August 2019 amounted to 0.18pp.

Construction sector growth in January-July 2019 was 11.8% yoy (+0.8% yoy January-August 2018). The contribution of construction to the STEI in the analyzed period was 0.65pp.

Telecommunication contributed the least to the STEI and made 0.04pp in January-August of the current year, evidencing the growth rate of 3.4% yoy (+5.2% yoy January-August 2018).

Fixed assets investments in January-August 2019, according to the preliminary data of the CS MNE, grew by 10.7% yoy (+21.4% yoy 8M2018). In nominal terms, investments in fixed assets reached T7,361bn within the analyzed period.

Our opinion

Over the eight months of this year, the economy of the republic, according to the STEI matric, significantly accelerated to 4.8% yoy, demonstrating the best growth rate for the third month in a row. According to the statement of the Minister of National Economy, R. Dalenov, the country's GDP for the eight months of this year made 4.3% yoy (for the first half of the year it grew 4.1% yoy). Over the 8 months of this year, the economy is still being boosted by the high growth rates of domestic trade (+ 7.6% yoy), transport (+ 5.5% yoy) and industry (+3.2). Industrial production showed the second best result of the increase in production for the current year (+ 3.2% yoy in 3M2019). The acceleration of industrial production growth is due to a reduction in the negative dynamics of growth in oil and natural gas production (-0.3% yoy), output of iron ore production in the positive growth zone (+ 2.2% yoy) and accelerating dynamics non-ferrous metal ore production growth (+ 17.9% yoy). The record growth in construction volumes at 11.8% yoy continues to increase its contribution to economic growth from 0.24pp in January-March to 0.65pp in January-August.