Kazakhstan's service industry contracts at the fastest rate in four years

LootboxPhobia · 2026-03-04T15:32:05+00:00

Kazakhstan's service industry experienced its most severe demand decline in four years in February, with the Business Activity Index falling to 48.0, and new orders decreasing for the first time. Companies reduced staff due to the VAT increase, and despite ongoing price pressures, business confidence slightly improved, with service providers still expecting future demand growth. The overall PMI Output Index declined significantly, reflecting challenges faced by the private sector.

LootboxPhobia

2026-03-04 15:32:05

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Investing.com – According to the Kazakhstan Services PMI data released on Wednesday by Freedom Holding Corp., the country’s service sector experienced its most severe demand decline in four years in February.

The Business Activity Index fell from 50.5 in January to 48.0 in February, indicating a modest decrease in business activity. This is the most significant drop since February 2023, with four out of the past five survey periods showing declines.

The decline in service sector output was driven by a decrease in new orders, marking the first drop in new orders in 16 months. The decline was moderate and roughly aligned with the decrease in business activity. Companies attributed this downturn to the VAT increase in January, which weakened demand trends and caused clients to face financial constraints.

In response to the decline in activity and new business, service providers reduced their staff numbers in February, reversing the slight employment growth recorded in January. The pace of layoffs was moderate, with employment decreasing in five of the past six survey periods.

Although somewhat alleviated compared to January, price pressures remain high. Input cost growth was the second-fastest since September 2022, while output prices increased at the second-highest rate on record. The impact of the VAT adjustment continues to influence costs and charges.

Business confidence improved from the recent low in December, reaching its highest level in three months. Service providers hope for stronger demand and mentioned investment plans, new projects, and an expanding customer base, although market sentiment remains subdued by historical standards.

Kazakhstan’s Composite PMI Output Index fell from 49.7 in January to 47.2 in February, indicating a significant decline in private sector output. This marked the largest decrease since early 2022, with contraction rates in manufacturing and services being comparable.

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