KPMG published the survey on the impact of the spread of COVID-19 on enterprises of the key industries of the Republic of Kazakhstan.
According to the preliminary estimates of a number of economists, the current economic crisis may become the deepest since World War II. An abrupt contraction of sales markets and breaks in supply chains, the cancellation of flights and constraints on the free movement of citizens, as well as the large-scale transition to self-isolation and lockdown have resulted in a significant contraction of business in various industries.
In April 2020, the KPMG expert team conducted a survey among more than 50 leaders of Kazakhstan’s business community, covering 14 different sectors of the economy:
- Finance
- Mining
- P&U
- Agriculture
- Aviation
- Food retail
- Non-food retail
- Telecom
- Real estate
- Industrial markets
- Food production
- Pharmaceuticals
- Restaurant business
- Fitness
First of all, I would like to thank all respondents for their time spent on the survey interviews in these challenging times for businesses, and for valuable expert opinions that formed the basis of our report. We, in turn, have made an effort to make the report interesting and helpful for you, and we hope that the findings of survey will help CEOs in making strategic decisions.
Executive Summary
1. It is highly likely that the current situation with COVID-19 will result in the onset of one of the deepest crises in Kazakhstan since the break-up of the USSR, as COVID-19 has caused a global economic crisis whose scope is still difficult to fully assess.
2. Based on the comparative analysis with other countries, the lockdown period in Kazakhstan may last 2-2.5 months.
3. In today’s market, the most vulnerable industries are SMEs, non-food retail, aviation, oil and gas, mining, transport, the power and utilities sectors.
4. Measures to reduce administrative expenses have been taken by 74% of respondents. About half of respondents are working proactively on optimising procurement (restructuring of accounts payable, optimisation of logistics, reviews of order books, and the deferral of some procurements to a later date).
5. Companies operating in all sectors of the economy (other than telecoms) have put on hold implementation of capital-intensive investment projects or are considering “less costly” options for the implementation of such projects.
6. Most market players are developing and deploying an anti-crisis action plan and intend to revise their development strategy. Virtually all companies are focused on the accelerated digitisation of their sales channels, and interaction channels with clients in the near future.
7. The representatives of major Kazakhstani businesses consider the announced government support measures to be insufficient and expect assistance in the form of tax breaks (including VAT refunds to export-oriented enterprises and companies operating in the aviation sector), the reimbursement of some expenses and preferential loans.
8. About 86% of respondents believe that a gradual return to pre-crisis positions will occur no earlier than in three to four quarters (or later), which suggests that the consequences of the crisis may also be observed in 2021.
9. The crisis will lead to significant changes in behavioural responses and the need for the government to rethink approaches to maintaining health safety. In addition, the crisis will result in a significant change in the business landscape and adjustments to strategic goal setting by both the government and business.
10. The devaluation of the tenge caused by falling oil prices and decreasing demand for base metals will have an adverse impact on consumer demand, but will also strengthen the competitive positions of enterprises operating in the export-oriented industries of Kazakhstan.
Contacts
For more information please contact us:
Dias Kalazhanov
Director, Deal Advisory
KPMG in Kazakhstan and Central Asia
Т: +7 (727) 298 08 98
Е: dkalazhanov@kpmg.kz