Confidence in Kazakhstan Dented…But Only Cosmetically

By Yekaterina Syrtsova, Associate Account Manager, The PBN Company

People in Kazakhstan feel surprisingly optimistic about the country’s economic situation, according to a recent poll by the Post-Crisis World Institute and the Public Opinion Foundation.  Interfax reports that only 16.6% of people believe that life will get harder before the summer, while 35.4% expect that the situation will improve.  The latter figure stands in contrast to Russia and Ukraine, where far fewer people (12.6% in Russia and 6.5% in Ukraine) expect the situation to get better before the summer.

Kazakhs also look favorably on their government’s anti-crisis measures - BusinessNewEurope reports that “66.3% [gave] their government a thumbs up, against 40.7% in Russia and just 13.5% in Ukraine.  Of those that criticized the government for its action (or lack of it) the numbers were 9.2% in Kazakhstan, 21.5% in Russia and a whopping 74.3% in Ukraine.”

According to the poll, confidence in the government’s ability to deal with the financial situation is a key factor in the economy’s overall resilience, as a collapse in consumer demand has the potential to impede recovery to a greater extent than the problems with the banking system.  And despite the professed optimism, the crisis has had a demonstrable effect on Kazakh spending habits.

The crisis has undeniably decreased buying power, especially with the devaluation of the tenge initiated by the National Bank of Kazakhstan earlier this year.  According to Kontinent Magazine, the behavior of both consumers and suppliers began to change even in the first 2-3 days of the devaluation.  Some business owners closed their stores, others started changing prices and others cancelled discounts and sales.  In a knee-jerk reaction, many people rushed to buy flour, sugar and other staples.

The situation has calmed down a bit as the currency has stabilized, but the effects still manifest themselves through higher prices and cautious spending.  Amid International Women’s Day celebrations at the beginning of the month, demand for expensive cosmetics dropped by 30-40%, Biznes i Vlast reported.  According to Economic Strategies Magazine, both women and men in Kazakhstan have started buying cheaper clothes.  Imports, especially white goods and electronics, have become less affordable.

A bright spot, however, is the premium alcohol industry.  The Head of Marketing at Pernod Ricard Kazakhstan told Newzz.kz, “We were expecting sales to fall…but [they] exceeded our expectations.”  That at least is something worth toasting.

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