The Kazakhstan Economic Update

Apr 7, 2024

Kazakhstan’s economy is predicted to experience steady growth over the next two years, with real GDP forecast to increase by 4.5-5% in 2025, according to The World Bank.

Although inflationary pressures are expected to remain elevated, measures to remove distortive subsidised interest rate policies will improve the effectiveness of monetary policy transmission. Investment in mining and manufacturing is anticipated to be stable, while the expansion of production capacity in existing oilfields is set to boost exports and spur growth in the petrochemical industry. With household spending growth expected to strengthen in 2024.

Kazakhstan’s growth outlook may face several downside risks due to both domestic and external factors. The tensions in and near the Black Sea due to Russia’s war in Ukraine could disrupt Kazakh oil exports via the Caspian pipeline. This would have severe economic repercussions, given the importance of the hydrocarbons sector. Additionally, any major unscheduled maintenance in the oil fields or unexpected delays in the development of the Tengiz oil field might curtail production and dampen economic growth.

Furthermore, unforeseen external pressures and volatility of the tenge could lead to higher inflation. Given Kazakhstan’s economic ties with Russia, the risk of secondary sanctions continues to be a concern. This would dent confidence, deter FDI, and undermine growth.