The outlook for a rapid global trade recovery has improved, according to the World Trade Organization (WTO), as trade flows grew faster than forecast in the second half of last year. The WTO estimates that global trade in goods is expected to grow by 8.0% in 2021 after falling by 5.3% in 2020, continuing the recovery from the pandemic-driven downturn that bottomed out in the second quarter of last year.
As for Kazakhstan's foreign trade, a post-pandemic recovery and further development is expected from the second quarter of 2021. This is due, among other things, to the beginning of the mass vaccination process, the gradual lifting of trade restrictions, the acceleration of inflationary processes in the world, the rapid recovery of the Chinese economy and other major trading partners, as well as the stabilization of world commodity prices.
This is proved by the not entirely comforting customs statistics for 2 months of 2021. Thus, the trade turnover of Kazakhstan in January-February 2021 amounted to about $11.8 bln, which is 17.4% behind the indicators of the same period in 2020 ($14.3 bln). The drop in foreign trade indicators is primarily due to a decrease in Kazakhstan's oil exports by 40.8% in value terms (from $5.7 to 3.4 bln) and by 13.2% in tonnage (from 12.1 to 10.5 million tons), which was affected by the fall in world oil prices and the country's obligations under the OPEC+ agreement on production in the context of a violation of the balance of oil supply and demand in the world.
The decline in oil revenue led to a deterioration in Kazakhstan's export performance. Thus, in January-February 2021, Kazakhstan's total exports fell by 25.2% - from $ 9.4 to 7.0 bln.
In addition to oil, there is a significant decline in export revenue from the sale of natural gas. In January-February, natural gas sales totaled $ 243.4 mln, which is 37.4% lower than last year.
In general, Kazakhstan's exports excluding oil and natural gas (hereinafter referred to as non – oil and gas exports) increased by 2.9% to $ 3.42 bln. Note that this result is the second in comparison with 2 months since 2016. It was more in January-February 2018 – $ 3.51 bln.
The main drivers of the growth of non-oil and gas exports are metallurgical products, such as copper cathodes (export growth +14.3%), iron ores (2.3 times growth), aluminum (+85.4%), semi-finished products made of iron (2.4 times growth) and rolled metal (+65%). This has been helped by record high global prices for copper, steel and iron ore as the global economy recovers from the pandemic. Analysts expect global metal prices to continue to rise as demand exceeds supply. In general, exports of steel products increased by 5.1% - from 1.98 to $ 2.08 bln.
We also note the growth of supplies to foreign markets of Kazakhstan wheat by 35% - from 129.7 to $ 175.2 mln. The increase in wheat exports is observed in the direction of Uzbekistan (+47.7%), Afghanistan (+36.5%) and China (+86.3%). As for flour, the supply of processed wheat abroad shows a negative trend. Export revenue from the sale of flour fell from $58.5 to $55.1 mln, or 5.7%. The accelerated development of the flour milling industry and the applied non-tariff barriers have probably made Kazakh flour uncompetitive in neighboring markets, so it becomes more profitable to sell wheat than flour.
In total, the supply of food products to foreign markets increased by only 1.8% - from $203.1 to $206.8 mln. Food exports to China fell by 39.1% during the period under review due to the limited number of vehicles accepted with Kazakh goods.
In the country context, Kazakhstan's exports grew only in the direction of Russia (+1.4%), Uzbekistan (+26.2%) and Spain (2.8%). The remaining main consumers significantly reduced the purchase of Kazakhstani goods.
In contrast to exports, import flows to Kazakhstan decreased slightly – from only $4.85 to $4.75 bln, that is, by 2.1%. The decline in imports is mainly due to a reduction in purchases of natural gas and various ferrous metal products.
In other areas, there is a significant increase in imports. Thus, the import of light industry goods to Kazakhstan in January-February of this year amounted to about $ 331.9 mln, which is 51% more than in the same period in 2020 ($ 219.5 mln), which is probably due to consumer expectations regarding an increase in prices for clothing and shoes in the near future due to rising cotton prices. We also note an increase in imports of construction materials by 10.3% (from $107.3 to $118.3 mln), pharmaceutical products by 16.3% (from $ 211.9 to $246.5 mln) and machine-building products by 6.8% ($1,244 to $1,328 mln). If the increase in imports of the pharmaceutical industry is due to increased measures to combat the consequences of the pandemic, the statistics on imports of goods from the machine-building industry and the construction industry show an increase in investment and construction activity in Kazakhstan.
At this time, the import of food industry goods sank by 12.1%, which may signal a decrease in the income of the population, if it is ready-made food products or the production capacity of food industry enterprises in the case of raw materials.
In terms of goods, we also note an increase in imports of cars by 79.4%, medicines by 5.1%, vaccines by 94%, televisions and monitors by 2.4 times and shoes by 55.6%.
The expansion of Chinese and Turkish goods continues in the Kazakh market, with imports of which increased by 21.3% and 20.6%, respectively, in January-February 2021. At the same time, imports from Russia (-4.5%), the United States (-21.5%), Italy (-25.6%) and Uzbekistan (14.5%) are declining.
In summary, it is worth noting that the main driver of the growth of the Kazakh economy is still subject to significant consequences of the pandemic. However, the monthly dynamics of oil supplies demonstrates a gradual recovery of export earnings, which will have a positive impact on the post-pandemic recovery of the country's economy. The increase in imports of investment goods is likely to indicate an increase in investment activity, which will also have a positive impact on the recovery of the economy of Kazakhstan.