Kazakhstan's service sector is growing again

Kazakhstan’s services sector grew again in April. According to the PMI survey by Freedom Holding Corp. published by S&P Global, business activity rose at its fastest pace in nine months.

The business activity index rose from 49.2 points in March to 53.9 points in April. This means it once again exceeded the 50-point mark that separates growth from contraction. It was the first expansion of the services sector in three months.

The survey points to the strongest growth in business activity since July 2025. This trend was driven primarily by a significant increase in new orders. Many companies reported stronger demand, higher sales, and improved capacity utilization.

More demand, but higher costs

At the same time, cost pressures increased again. Input cost inflation accelerated and once again approached the highs seen in January, when adjustments related to the value-added tax had a particularly strong impact.

Despite higher costs, the rise in selling prices slowed. Some companies relied on more competitive prices to secure sales volumes and attract new customers.

Saltanat Mukhambetaliyeva, Head of the Economic Research and Analysis Department at Freedom Holding Operations, explained: “Kazakhstan’s services sector recorded a significant acceleration in April following three months of decline. The Business Activity Index rose to 53.9 points, an increase of 4.8 points from the previous month, supported by a rise in new orders.”

Recovery should be viewed with caution

Mukhambetaliyeva cautioned, however, against overinterpreting the strong monthly increase. Such a marked improvement is atypical for the Kazakh market and has historically been observed primarily during recovery phases following crises, such as after the pandemic or in 2022.

The improvement remains limited and is not accompanied by a fundamental change in the underlying economic data. This is evident, among other things, in the continued cautious employment policy and intensified restructuring measures.

Cost pressures are now driven primarily by higher wages and rising input costs, rather than by tax factors. According to Freedom Holding, growth was concentrated primarily in the real estate sector, which benefited from a 16 percent year-over-year increase in mortgage lending, as well as in business services. Consumer-related sectors and the transportation sector, on the other hand, remained subdued.

Expectations for the coming twelve months remained moderately optimistic but continued to fall below the long-term average.