Kazakhstan flag Kazakhstan: Economic and Political Overview

The economic context of Kazakhstan

Economic Indicators

For the latest updates on the key economic responses from governments to address the economic impact of the COVID-19 pandemic, please consult the IMF's policy tracking platform Policy Responses to COVID-19.

Kazakhstan's economic growth is largely based on gas and oil revenues (around 35% of GDP and 75% of exports). In 2019, Kazakh GDP grew by 4.5%, as domestic demand, business spending and construction boom supported economic activity. In 2020, Kazakhstan's economy experienced a setback due to the COVID-19 outbreak, reporting a negative growth balance of 2.6%, but came back in 2021 with a rate of + 3.3%. According to the latest IMF forecast, growth is expected to increase in 2022 and 2023, at 3.9% and 5.8% of GDP respectively.

The COVID-19 pandemic fallout has affected the economy more than the 2008 and 2015 crises. The pandemic halted global activity in the second quarter of 2020, and depressed global demand and oil prices. In April 2020, the average oil price fell to $21 per barrel, the lowest in two decades. Despite the government's diversification efforts, Kazakhstan is still dependent on oil prices and the economy relies heavily on hydrocarbon exports. This has made the economy even more vulnerable. Public debt reached 25.2% of GDP in 2021, compared to 26.3% reported in 2020, and is expected to increase to 26.5% in 2022 and 27.6% in 2023. The country's budget deficit reached -6.6% of GDP in 2020 but was reduced to -2.7% in 2021. The IMF forecasts another increasing budget deficit of -1.3% for 2022 and -1% in 2023. Inflation rose to 6.8% in 2020 and 7.5% in 2021, but is expected to reach 6.5% in 2022 and 5% in 2023, according to the IMF's latest World Economic Outlook (October 2021).
Since 2015, Kazakhstan has been a member of the Eurasian Economic Union (with Russia, Belarus, Armenia and Kyrgyzstan), which could eventually be used to facilitate economic diversification. Kazakhstan is turning more to China for its development needs, while China needs the country to develop its "Silk Road" project: a railway terminal was opened on the Chinese side of the border in 2015. Anti-Chinese sentiment grew in the country in 2019 with sporadic mass protests against a backdrop of a perceived Chinese takeover of domestic economy. This sentiment remain very much present in 2022. Kazakhstan halted oil exports to China at the start of 2020 after discovering contaminated material in crude flows to China. The new Kazakh president Kassym-Jomart Tokayev now seeks to strengthen economic ties with China.

Emerging challenges include weakening global demand for fossil fuels, greater regional competition to attract investment, increased risks of instability in the financial sector and more need for accountable and transparent governance.

Unemployment rate decreased to 4.8% in 2021, down from 4.9% in 2019, despite the negative economic effects of the Covid-19 pandemic. According to IMF estimates, unemployment should remain stable at 4.7% in 2022 and 2023. The World Bank's Kazakhstan Economic Update estimates that the country's poverty rate has increased to 12-14% in 2020 from a baseline of 6% in 2016. The government has implemented a substantial amount of direct support to businesses through tax deferrals and subsidised loans, and financial support to poor households and affected individuals. Volatile oil prices and uncertainty over the scale of global demand for hydrocarbons are other risks that could weaken export and pressure exchange rate. The recent increase in housing prices also makes home ownership less affordable and a steady rise in mortgage lending along with lifting of forbearance measures could expose the banking sector to higher NPLs in the event of future shocks. Moreover, with the heavily reliant on hydrocarbons, the country faces challenges arising from the emissions reduction and low-carbon transition (World Bank, 2022).

 
Main Indicators 20202021 (e)2022 (e)2023 (e)2024 (e)
GDP (billions USD) 171.08197.11224.34243.40254.35
GDP (Constant Prices, Annual % Change) -2.64.12.54.44.5
GDP per Capita (USD) 910111212
General Government Balance (in % of GDP) -6.7-5.0-2.0-1.9-1.0
General Government Gross Debt (in % of GDP) 26.425.123.324.425.7
Inflation Rate (%) 6.88.014.011.37.5
Unemployment Rate (% of the Labour Force) 4.94.94.94.84.8
Current Account (billions USD) -6.57-5.746.684.431.52
Current Account (in % of GDP) -3.8-2.93.01.80.6

Source: IMF – World Economic Outlook Database, October 2021

Note: (e) Estimated Data

Main Sectors of Industry

Kazakhstan benefits from multiple natural resources. Major deposits of oil, natural gas, coal, iron ore, manganese, chromium ore, nickel, cobalt, copper, lead, zinc, bauxite or uranium. The country also has a large agricultural area (ranked 6th world), composed of arable land and pastures. Agriculture suffered from a strong decline in the aftermath of the fall of the Soviet Union, but has recovered in the last 20 years. The sector accounts for 5.4% of GDP and employs 15% of the working population. Agriculture in the country is extensive, but ageing infrastructure limits its development. More than half of the products are vegetable crops (cereals, including wheat, oilseeds, cucurbits). Kazakhstan is one of the world's leading wheat producers. Livestock and dairy industries account for a significant share of the agricultural sector. Kazakhstan is almost self-sufficient in agri-food.

The Kazakh industry has been grown in the last few years, now accounting for 33.1% of GDP and employing 21% of the working population. Metallurgy of ferrous and non-ferrous metals, hydrocarbon production, textiles, chemicals and pharmaceuticals and fertilizers are the main industrial products.

The tertiary sector is the main sector in Kazakhstan and growing steadily. It accounts for 56.1% of GDP and employs 64% of the working population. The financial sector, transport and technology are the main services produced in the country. The tourism sector, although not yet very developed, was experiencing strong growth. Unfortunately, the Covid-19 pandemic halted this development. Moreover, the pandemic has hit severely retail, hospitality, wholesale, and transport sectors, which account for around 30% of employment, and are mostly concentrated in cities.

 
Breakdown of Economic Activity By Sector Agriculture Industry Services
Employment By Sector (in % of Total Employment) 14.9 21.0 64.2
Value Added (in % of GDP) 5.3 33.1 55.8
Value Added (Annual % Change) 5.6 3.0 -5.6

Source: World Bank, Latest Available Data. Because of rounding, the sum of the percentages may be smaller/greater than 100%.

 

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Indicator of Economic Freedom

Definition:

The Economic freedom index measure ten components of economic freedom, grouped into four broad categories or pillars of economic freedom: Rule of Law (property rights, freedom from corruption); Limited Government (fiscal freedom, government spending); Regulatory Efficiency (business freedom, labour freedom, monetary freedom); and Open Markets (trade freedom, investment freedom, financial freedom). Each of the freedoms within these four broad categories is individually scored on a scale of 0 to 100. A country’s overall economic freedom score is a simple average of its scores on the 10 individual freedoms.}}

Score:
71,1/100
World Rank:
34
Regional Rank:
8

Economic freedom in the world (interactive map)
Source: Index of Economic Freedom, Heritage Foundation

 

Business environment ranking

Definition:

The business rankings model measures the quality or attractiveness of the business environment in the 82 countries covered by The Economist Intelligence Unit’s Country Forecast reports. It examines ten separate criteria or categories, covering the political environment, the macroeconomic environment, market opportunities, policy towards free enterprise and competition, policy towards foreign investment, foreign trade and exchange controls, taxes, financing, the labour market and infrastructure.

Score:
5.53/10
World Rank:
63/82

Source: The Economist Intelligence Unit - Business Environment Rankings 2021-2025

 

Country Risk

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Sources of General Economic Information

Ministries
Ministry of Finance
Ministry of Economy
Ministry for Industry and Infrastructure
Ministry of Agriculture
Ministry of Justice
Statistical Office
Agency of Statistics of the Republic of Kazakhstan
Central Bank
National Bank of Kazakhstan
Stock Exchange
Kazakhstan Stock Exchange(Kaze)
Economic Portals
The Astana Times
Portal on Mining Sector
 

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Latest Update: November 2022