Economic Outline

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 2021, Kazakh GDP grew by 4.1%, as domestic demand, business spending and construction boom supported economic activity, but came down to 2.5% in 2022. According to the latest IMF forecast, growth is expected to increase in 2023 and 2024, at 4.4% and 4.5% 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. 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 25.1% of GDP in 2021 and 23.3% in 2022, and is expected to increase to 24.4% in 2023 and 25.7% in 2024. The country's budget deficit reached -5% of GDP in 2021 but was reduced to -2% in 2022. The IMF forecasts another budget deficit of -1.9% for 2023 and -1% in 2024. Inflation rose to 8% in 2021 and more than 14% in 2022, but is expected to reach 11.3% in 2023 and 7.5% in 2024, according to the IMF's latest World Economic Outlook (January 2023).

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 remained stable at 4.9% in 2022, despite the negative economic effects of the Covid-19 pandemic. According to IMF estimates, unemployment should remain at 4.8% in 2023 and 2024. The World Bank's Kazakhstan Economic Update estimates that the country's poverty rate has increased to 12-14% in 2022 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).

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