The economy of Kazakhstan is the largest economy in Central Asia. It possesses
enormous oil reserves as well as minerals and metals. It also has
considerable agricultural potential with its vast steppe lands accommodating both
livestock and grain production, as well as developed space infrastructure, which
took over all launches to the International Space Station from the
Space Shuttle. The mountains in the south are important for apples and
walnuts; both species grow wild there. Kazakhstan's industrial sector rests on
the extraction and processing of these natural resources and also on a
relatively large machine building sector specializing in construction equipment,
tractors, agricultural machinery, and some military items. The breakup of the
USSR and the collapse of demand for Kazakhstan's traditional heavy industry
products have resulted in a sharp contraction of the economy since 1991,
with the steepest annual decline occurring in 1994. In 1995-97 the pace
of the government program of economic reform and privatization quickened,
resulting in a substantial shifting of assets into the private sector. The
December 1996 signing of the Caspian Pipeline Consortium agreement to build a
new pipeline from western Kazakhstan's Tengiz Field to the Black Sea increases
prospects for substantially larger oil exports in several years. Kazakhstan's
economy turned downward in 1998 with a 2.5% decline in GDP growth due to
slumping oil prices and the August financial crisis in Russia. A bright
spot in 1999 was the recovery of international petroleum prices, which,
combined with a well-timed tenge devaluation and a bumper grain harvest,
pulled the economy out of recession. Current GDP per capita shrank by 26% in
the Nineties. In the 2000s, Kazakhstan's economy grew sharply, aided by increased
prices on world markets for Kazakhstan's leading exports—oil, metals and grain.
GDP grew 9.6% in 2000, up from 1.7% in 1999. In 2006, extremely high GDP growth
had been sustained, and grew by 10.6%. Business with booming Russia and China,
as well as neighboring Commonwealth of Independent States nations have helped
to propel this growth. The increased economic growth also led to a
turn-around in government finances, with the budget moving from a cash deficit of
3.7% of GDP in 1999 to 0.1% surplus in 2000. The country experienced a slowdown
in economic growth from 2014 sparked by falling oil prices and the effects of
the Ukrainian crisis The country's currency was devalued by 19% in 2004 and
by 22% in 2015. In 2015, the World Economic Forum
compiled its Global Competitiveness Ranking ranking Kazakhstan 50th out of
144 countries. The ranking considers multiple macroeconomic and financial
factors, such as market size, GDP, tax rates, infrastructure development, etc.
In 2012, the World Economic Forum listed corruption as the biggest problem in
doing business in the country, while the World Bank listed Kazakhstan as a
corruption hotspot, on a par with Angola, Bolivia, Kenya, Libya and
Pakistan. Kazakhstan secured 2nd position in the
Central and South Asia regional ranking of the 2015 Global Innovation Index
released by World Intellectual Property Organization together with Cornell
University and INSEAD France. Macro-economic trend
In the 2014 Economic Freedom Index published by the Heritage Foundation in
Washington, DC, Kazakhstan has gained 22 points over the past 17 years, which is
noted by the authors as among the 20 best improvements recorded by any
country. Kazakhstan ranks 11th out of 42 countries in the Asia–Pacific region,
and its overall score is above the world and regional averages.
This chart shows trends in the gross domestic product of Kazakhstan at market
prices estimated by the International Monetary Fund, with figures in millions
of Kazakhstani tenge. For purchasing-power parity comparisons,
the US Dollar is exchanged at 59.95 Tenges only. Mean wages comprised $6.93
per man-hour in 2009. Kazakhstan has managed its monetary
policy well. Its principal challenge in 2001 was to manage strong
foreign-currency inflows without sparking inflation. Inflation had, in
fact, stayed under control, registering 9.8% in 2000, and appeared likely to be
under 10% in 2001. Because of its strong economic performance and financial
health, Kazakhstan became the first former Soviet republic to repay all of
its debt to the IMF by paying back $400 million in 2000; 7 years ahead of
schedule. Overall foreign debt amounts to about $12.5 billion, $4 billion of it
owed by the government. This amounts to 6.9% of GDP, well within manageable
levels. The upturn in economic growth, combined
with the results of earlier reforms in taxation and in the financial sector,
dramatically improved government finances from the 1998 budget deficit
level of 4.2% of GDP to a slight surplus in 2000. Government tax-revenues grew
from 16.4% of GDP in 1999 to 20.6% of GDP in 2000. In 2000, Kazakhstan adopted
a new tax-code in an effort to consolidate these gains. Its strong
financial position also allowed the government to reduce the value-added tax
from 20% to 16% and to reduce social taxes as of July 2001. Kazakhstan's
stronger budget-position and strong export-earnings earned it credit-rating
upgrades from Moody's, S&P, and Fitch during 2001.
Kazakhstan instituted a pension reform program in 1998 that was partly based on
the model of the Chilean pension system but included modifications. By July
2001, Kazakhstanis had contributed more than $1 billion to their own personal
pension-accounts, mostly managed by the private sector. The National Bank
oversees and regulates the pension funds. The pension funds' growing demand
for quality investment outlets triggered rapid development of the debt-securities
market. Pension-fund capital is being invested almost exclusively in corporate
and government bonds, including Government of Kazakhstan Eurobonds. The
Kazakhstani banking system is developing rapidly. Banking systems capitalization
now exceeds $1 billion. The National Bank has introduced deposit insurance in
its campaign to strengthen the banking sector. Several major foreign banks have
branches in Kazakhstan, including The Royal Bank of Scotland Group, Citibank,
and HSBC. Kazakhstan is also a member of the Economic Cooperation Organization.
According to the Republic of Kazakhstan Agency for Statistics, in January–March
2010 production of GDP amounted to 3,881.6 billion tenge and an increase of
7.1%. Economic Growth & GDP
Kazakhstan's GDP grew 4.1% in real terms during the period from January to
September 2014. Kazakhstan's real GDP growth is
projected to reach 4.3% in 2014, the main driving force of the economy in
Kazakhstan in 2014 is the consumer sector; the consumption in Kazakhstan is
mainly boosted by the retail lending. According to the Agency of Statistics of
the Republic of Kazakhstan the Kazakhstan's GDP growth in the first
quarter of 2014 was 3.8%. The Government of Kazakhstan signed a
Framework Partnership Agreement with IBRD, IFC, MIGA on May 1, 2014;
according to this Agreement the World Bank will allocate $2.5 billion to
Kazakhstan, for the diversification of the economy and reaching the sustainable
development. Oil & Gas
Oil and gas is the leading economic sector. In 2000, Kazakhstan produced
35,252,000 metric tons of oil, a 17.4% increase over 1999's 30,025,000 tons. It
exported 28,883,000 tons of oil in 2000, up 38.8% from 20,813,000 tons in 1999.
Production in 2001 has been growing at roughly 20%, on target to meet the
government's forecast of 40,100,000 tons of oil. In 2000, production reached 11.5
km³ of natural gas, up from 8.2 km³ in 1999.
Kazakhstan has the potential to be a world-class oil exporter in the medium
term. The landmark foreign investment in Kazakhstan is the TengizChevroil joint
venture, owned 50% by ChevronTexaco, 25% by ExxonMobil, 20% by KazMunaiGas of
Kazakhstan, and 5% by LukArco of Russia. The Karachaganak natural gas and gas
condensate field is being developed by BG, Agip, ChevronTexaco, and Lukoil. The
Agip-led Offshore Kazakhstan Consortium has discovered potentially huge Kashagan
oil field in the northern Caspian. Kazakhstan's economic future is linked
to oil and gas development. GDP growth will depend on the price of oil, as well
as the ability to develop new deposits. Mining
Kazakhstan is a leading producer of many mineral commodities, including uranium,
ferrochrome, titanium sponge, cadmium, magnesium, rhenium, copper, bauxite,
gallium and zinc. It is the leading country in the world
for uranium production volumes, with 35% of global production, and it has the
world's second biggest uranium reserves after Australia.
Trade Sherin Suzhikova, Counselor of
Kazakhstan's Chamber of Commerce and Industry and Chao yon-chuan,
Secretary-General of the Taiwan External Trade Development Council, signed an
agreement on 13 October 2006 in Taipei to improve economic relations through
"exchanges of market information and visits by trade professionals." TAITRA
has an office in Almaty, Kazakhstan. In 2006, North Dakota's then Lieutenant
Governor Jack Dalrymple led an 18-member delegation of the North Dakota Trade
Office representing seven North Dakota companies and Dickinson State University
on a trip to Kazakhstan, Ukraine and Russia. North Dakota exports mostly
machinery to Kazakhstan, the eighth largest destination for North Dakotan
exports; machinery exports increased from $22,000 to $25 million between 2000
and 2005. China is Kazakhstan's important trade
partner. In late March 2015 the two countries signed 33 deals worth $23.6
billion. The deals cover different industries, such as oil refining, cars,
steel. During the press conference on July 20,
2015 Minister of Investment and Development of Kazakhstan said: "As of
today, we export about 850 types of goods. Kazakhstan is among the top-50
best exporting countries globally and takes the 49th place."
Small and Medium-Sized Enterprises A new program to support small
businesses was launched in Kazakhstan in February 2015. 2015 is expected to be a
pilot period of the program. During that period the initiative will be focused on
three major areas, notably agribusiness, machinery building and production of
construction materials, and is to be further extended to other industries.
According to the Global Entrepreneurship Monitor-2014, Kazakhstan has a very
positive image of the entrepreneurs. Nearly 70 percent of the population sees
entrepreneurship as a good choice for building a career and achieving a high
status in the society. Kazakhstan can also boast one of the lowest closing
index, according to the Global Entrepreneurship Monitor-2014, meaning
that only 2.9% of entrepreneurs were forced to cease their business.
Another important business trend in Kazakhstan is the growing role of women
in this field. Over 50% of entrepreneurs in Kazakhstan are women.
In May 2015 the European Bank for Reconstruction and Development and the
government of Kazakhstan have signed three agreements to provide €41 million
for technical cooperation projects, advisory support to small and
medium-sized enterprises and a Women in Business program. This initiative
demonstrates that Kazakhstan invests in developing women businesses and supports
diversity in this field. Car Industry
In June 2014 the CKD assembly of Toyota Fortuner was launched in Kostanay,
Kazakhstan. The expected annual output makes around 3,000 cars: 250 a month.
The Kazakhstan's car industry was developing rapidly in 2014 producing $2
billion worth of products annually. By 2018 the car industry in Kazakhstan is
expected to reach 190,000 cars per year. Technology
On 22 December 2014 the World Bank approved an $88 million loan that would
support Kazakhstan’s efforts to facilitate commercially and socially
viable innovation in technology. The Fostering Productive Innovation Project
aims to improve the country in areas that are able to foster and support
technological innovation. Investments
In June 2014 Kazakhstan's President, Nursultan Nazarbayev, signed into law
tax concessions to promote foreign investment, including a 10-year
exemption from corporation tax, an 8-year exemption from property tax, and
a 10-year freeze on most other taxes. Other measures include a refund on
capital investments of up to 30 percent once a production facility is in
operation. As of July 2015, Kazakhstan attracted
$16 billion in the manufacturing industry over the past five years, which
is 2.5 times more than over the previous five years. Kazakhstan put into
operation four hundred new products, such as car industry, railway
engineering, manufacture of basic chemical products, uranium industry, the
industry of rare earth metals. The volume of new enterprises amounted to
580 billion tenge. New Economic Policy "Nurly Zhol"
On November 11, 2014 in his address to the nation for 2015 Nursultan Nazarbayev
proclaimed Kazakhstan’s New Economic Policy – The Path to the Future. The new
economic policy implies massive state investment in infrastructure over the
next several years. In the short term, the program "Nurly Zhol" will apply the
anti-crisis measures to overcome the turbulence in the global economy. The
long-term measures of the state program of infrastructure development will help
to create a strong platform for new growth.
2014 and 2015 developments The country experienced a slowdown in
economic growth from 2014 sparked by falling oil prices and the effects of
the Ukrainian crisis The country devalued its currency by 19% in February
2014. Another 22% devaluation occurred in August 2015.
See also Yerbolat Dosayev, Minister of National
Economy Aset Isekeshev, Minister of Industry and
Development Vladimir Shkolnik, Minister of Energy
Asylzhan Mamytbekov, Minister of Agriculture
References External links
World Bank Summary Trade Statistics Kazakhstan
U.S. Department of Energy Country Analysis Brief
Kazakhstan Plans to Build Highway Connecting China and Europe
Kazakh central bank misspells 'bank' on money
International Business; China Pays Dearly for Kazakhstan Oil
Kazakh President's Daughter Chides Steel Baron Mittal
Commercial gold and copper discoveries in Kazakhstan
Kazakhstan Changes Energy Strategy on the Way to WTO
Kazakhstan to be top oil producer by 2011: Nazarbayev
"Agriculture in Kazakhstan" Tariffs applied by Kazakhstan as
provided by ITC's Market Acces Map, an online database of customs tariffs and
market requirements