Kazakhstan economy probably expanded at slowest pace since 2009

Gross domestic product expanded 5.2 percent in the first half from a year earlier, down from a 5.6 percent advance in the first quarter, according to the median estimate of three economists surveyed by Bloomberg. The State Statistics Agency in Astana is scheduled to release GDP figures by Aug. 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 Nursultan Nazarbayev is counting on domestic consumption to balance shrinking export revenue as it targets growth of about 7 percent this year and seeks to safeguard that pace of expansion until 2015, Kazinform has learnt from Bloomberg.

"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," Vladimir Tikhomirov and Polina Badasen, analysts at Moscow-based Otkritie Financial Corp. said in a report. "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 percent from a year earlier after a 1.7 percent decrease in June. Production fell 3.5 percent 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, according to data compiled by Bloomberg.

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