Kazakhstan Economy Facts

by ebizdir · Published January 30, 2023 · Updated February 22, 2023

Economical overview

Kazakhstan’s economy is dominated by the oil industry; it accounts for over half of export earnings and contributes to almost a third of GDP. Falling oil prices contributed to an economic crisis in 2014 and the government is trying to reduce the state’s dependence on oil.

The oil has attracted large foreign investment to the country and contributed to high growth during the period 2000-2007. The international financial crisis of 2008-2009 hit the Kazakh economy with overbought banks, growing unemployment and a currency devaluation that hit the poor population hard. But growth was above zero, thanks in large part to high raw material prices, and soon it accelerated again.

Countryaah.com: Major imports by Kazakhstan, covering a full list of top products imported by the country and trade value for each product category.

The crisis of 2014

New turmoil caused the economy to slow down again in 2014. At the beginning of the year, the central bank was forced to write down the currency, tenge, by 19 percent. This was a result of the currency’s value falling as a result of a strong outflow of foreign capital. The devaluation triggered sharp reactions from savers and entrepreneurs. To prevent a bank crash, then-President Nazarbayev ordered the government to use state-funded funds to promote growth. Public sector salaries were increased, as were pensions and social security contributions.

From the summer of 2014, the world market price of oil fell sharply at the same time as the Ukraine crisis (see Ukraine, current policy) and slower growth in China had a dampening effect on the region. Growth fell and the government implemented incentive measures, including in the form of a privatization program and investment in infrastructure.

Abbreviationfinder.org: Check this abbreviation website to find three letter ISO codes for all countries in the world, including KAZ which represents the country of Kazakhstan.

In the fall of 2014, Kazakhstan signed a cooperation agreement with the EU and hoped to attract new foreign investors. The sanctions imposed by Western countries on Russia because of the situation in Ukraine provided an opportunity for Kazakhstan to attract foreign investors. At the same time, the stagnation of the Russian economy was a cause for concern for the Kazakhs, for both political and economic reasons.

Popular dissatisfaction

In August 2015, the central bank abandoned the fixed exchange rate and allowed the bond to float, promptly losing 26 percent of its value against the US dollar. The measure was partly explained by demands from the exporting companies.

Opec countries restricted oil production from 2017 in order to push up world market prices. Kazakh growth was increasing, but a popular dissatisfaction was that the living standards of the majority of people were not improved enough and that the government was unable to create enough new jobs. President Nazarbayev’s departure in 2019 did not lead to any changes in economic policy.

Kazakhstan has attracted greater foreign investment per inhabitant than any other former Soviet Republic, even though stringent regulatory systems, widespread corruption and a weak judicial system make it difficult for stakeholders abroad. The dependence on an individual sector makes the economy vulnerable to fluctuations in world market prices. The government is trying to broaden the economic base and develop new industries to reduce dependence on commodity exports.

Well-managed finances

Kazakhstan is often praised for well-managed finances and market liberal legislation that has contributed to the large foreign investment. After the painful transition from the planning to the market economy in the 1990s, the financial situation has generally been robust. The tax system has been reformed, a new pension system has been launched and the banking sector has developed steadily. Kazakhstan was able to repay its debt to the IMF in early 2000 – as the first former Soviet state.

In the 1990s, Kazakhstan struggled with a trade deficit, but since then the upswing in oil exports has led to a sharp trade surplus. Other important export goods are metals, natural gas, cereals and chemicals.

Previously, almost all trade took place within the Soviet Union. Russia is still the largest importing country, but otherwise the EU countries and China have become increasingly important trading partners.

Read about the economic cooperation of the former Soviet Republic and the Eurasian Economic Union (EEU) in Foreign Policy and Defense.

FACTS – FINANCE

GDP per person

US $ 9,331 (2018)

Total GDP

US $ 170 539 M (2018)

GDP growth

4.1 percent (2018)

Agriculture’s share of GDP

4.2 percent (2018)

Manufacturing industry’s share of GDP

11.6 percent (2018)

The service sector’s share of GDP

54.5 percent (2018)

Inflation

5.3 percent (2019)

Government debt’s share of GDP

21.0 percent (2018)

External debt

US $ 167 485 M (2017)

Currency

tenge

Merchandise exports

US $ 59,630 M (2018)

Imports

US $ 33,271 million (2018)

Current account

– US $ 52 million (2018)

Commodity trade’s share of GDP

55 percent (2018)

Main export goods

Oil and petroleum products, metals, grain (2017)

Largest trading partner

Russia, China, Italy, Germany, Netherlands, France, Switzerland (2017)

2008

March

The president’s son-in-law is sentenced to 20 years in prison

Nazarbayev’s exiled son-in-law Rachat is sentenced in his absence to 20 years in prison for planning a coup. Rachat rejects the allegations and claims that they are politically motivated.