Kazakhstan manufacturing PMI falls as VAT hike drives record price increases

Kazakhstan's manufacturing sector experienced a significant downturn in April, as indicated by a decline in the Purchasing Managers' Index (PMI). The PMI, a key economic indicator that measures the health of the manufacturing sector, fell to 48.5 in April from 50.3 in March. A PMI reading below 50 suggests contraction in the sector, while a reading above 50 indicates expansion. This decline comes amidst a backdrop of economic challenges, notably the recent increase in the Value Added Tax (VAT) rate. The VAT hike, which took effect in January, has driven record price increases across various sectors, including manufacturing. The higher VAT rate has led to increased production costs, which in turn have been passed on to consumers, resulting in higher prices for goods. This has dampened consumer demand and negatively impacted the manufacturing sector's growth prospects. The situation is further complicated by global economic uncertainties, which have affected export markets and supply chains, adding to the sector's woes. Industry experts suggest that the government may need to implement supportive measures to mitigate the adverse effects of the VAT increase and stimulate economic activity in the manufacturing sector.