Why is Living Index Expensive in Kazakhstan than in USA?

The day before, International Rating Agency GOBankingRates informed that Kazakhstan was included into the TOP five countries with the cheapest cost of living conditions. Agency associates oriented to the standard of living cost in New York during the assessment. But, if to look in the other way, the living index is expensive in Kazakhstan rather than in the USA. Why?

According to analytical data by 365info.kz, it became clear that purchasing power Kazakhstan citizens is lower to 38,2% than in the residents of New York City. The cost of food is cheaper to 74,8% and local goods&servises for 68,7%.

But this is not the real cost of living in Kazakhstan. Purchasing power of such countries as like Kazakhstan, Azerbaijan, Russia, Venezuela (oil exporting countries) directly depends on the price of hydrocarbons (oil and gas) and on the exchange rate of US dollar to Kazakhstani tenge, the national currency.

Whatever the state officials and experts say, exchange rate directly influences demand and loss in the local market, an ability to payment balance of the country, state income etc.

About a year ago, purchasing power of Kazakhstan citizens was twice higher. Nowadays, we see the other results.

For to know which country is better to retire, we have to compare average salaries, purchasing power and cost of food in Germany, USA, Russia and Kazakhstan.

Salaries

According to Statistic Agency of Kazakhstan for January 2016, the average monthly salary equaled to 126 996 tenges or 359 US dollars (353tg/1 dollars). The average monthly salary in Russia composed 33 thousand 857 rubles or about 443 dollars (76 rub/1 US dollars).

According to data from German center Statista.de, average monthly salary is 4090 euros, in dollars, $4500. Since 2016, the minimum payment in the USA is 10 dollars per an hour. This rate is for general workers as loaders, cleaners etc. And qualified workers is paid 9 000 US dollars per month. So, if to count with a minimum amount, average salary equals to 4600 dollars.

Food price

The ordinary citizen of Kazakhstan spends about 30% of his or her income only for food. Meanwhile, according to calculations of the American Service of economic researches, Americans spend less than anywhere in the world for food. It amounts 6.5% of American’s budget.

Moreover, Great Britain expenses 8,7% from the budget for house food. The other countries like Canada (9,6%), Germany (10,6%), Italy (14,2%), Japan (13,5%), Greece (16,5%), Turkey (21,6%) spend less than developing countries as China (25,5%), India (29%), Russia (29,4%), Ukraine (37,7%), Cameroon (45,6%).

After these numbers, we are definitely sure themselves that the result of the sharp devaluation of ruble and tenge effected to the salaries in Kazakhstan and Russia. It totally differentiates the economic liability of these countries comparing with Germany and the USA.

Before to answer to the question «Why is living index expensive in Kazakhstan than the USA?», we have to compare GDP and inflation rate of particular countries. According to Nikita Maslennikov Institute of modern development (Russia), rates of inflation are absolutely incomparable in America and Russia (and in Kazakhstan too).

When the basic inflation stables in 1,9% in Germany and USA, an annual inflation rate of Kazakhstan, totally depended country in oil price, went up to 15%.

Kazakhstan has to change the structure of the economy in order to provide the steady growth of the income in the future. There is no other way.

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