Economic Analysis


Population 17.6 million
GDP per capita 10,426 US$
Country risk assessment
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major macro economic indicators

  2014 2015  2016 (e) 2017 (f)
GDP growth (%) 4.3 1.2 1.1 2.5
Inflation (yearly average) (%) 6.7 6.5 14.0 9.5
Budget balance (% GDP) 1.7 -6.8 -6.0 -4.0
Current account balance (% GDP) 2.8 -3.2 -2.5 -0.5
Public debt (% GDP) 14.1 21.9 21.4 21.3


(e) Estimate (f) Forecast


  • Forecast increase in oil and gas exports thanks to exploitation of the Kashagan Field
  • High levels of foreign direct investment
  • Strategic location between Asia and Europe


  • Reliant on commodities (oil, gas, uranium and iron).
  • Fragile banking system
  • Persistent shortcomings in legal and institutional framework
  • Risk of political instability if succession to President Nazarbayev is rushed

Risk assessment

Slow upturn in activity

Following two years of marked slowing, growth is expected to gradually pick up in 2017, driven by the oil and gas sector. The re-opening of the Kashagan Field in October 2016, after a three year shutdown, should enable a gradual increase in oil production, from less than 1.6 million bpd in 2016 to 1.8 million in 2017 according to OPEC.

In addition, major public infrastructure investment projects, in particular in the transport sector in the context of the “one belt, one road” initiative launched by China, will boost the construction sector. Activity in the services sector should remain positive, especially tourism, which could benefit from the knock-on from the international EXPO 2017 taking place in Astana in June.

There will be a greater contribution from foreign trade towards growth than in 2016 thanks to increased oil and gas sales.

Consumption (over 50% of GDP) is expected to be boosted by the improved jobs market, thanks in particular to legislation that came into force at the beginning of 2016, as well as by slightly less restrictive budget policy. The central bank is likely to continue the gradual relaxation of monetary policy started in 2016 (rates cut from 17% to 12%) and thus boost domestic demand.

Inflation, under the impact of food prices, is expected to ease thanks to a slowdown in price rises in Russia (the leading source of imported goods) and a firming up of its currency, the tenge. It is however likely to remain in excess of the central bank’s rate ceiling (6-8%).


Slow improvement in the twin deficits

Non-oil and gas revenues are not expected to increase dramatically in the low growth. Nevertheless, an increase in output together with higher oil prices will help boost tax revenues from the oil and gas sector (more than half of the total). The State is likely, in a relatively tense social climate, to slightly relax its social expenditure policies. Its infrastructure projects are expected to continue and be mostly financed by the (NFRK) oil and gas fund, thus limiting the impact on the budget. The deficit could thus shrink.

Export revenues from the oil and gas sector (over 70% of the total) should increase as volumes and prices increase despite the slow rate of growth of demand in the country’s leading export markets: the EU, China and Russia. Imports, again limited by weak domestic demand, should not pose a problem for the current account balance. In addition, tourism revenues should feel the benefits of the upcoming international exhibition. There should therefore be an improvement in the current account balance.



Following the massive depreciation (-50% against the dollar) recorded in 2015 in response to the introduction of a floating exchange system, the firming of the tenge exchange rate during 2016 should continue in 2017, provided oil and gas prices do not fall again. The country is still vulnerable to external shocks, with bank and corporate debt being mainly denominated in foreign currency. The level of its currency reserves (5 months of imports, excluding gold) and its sovereign fund assets (USD 62 billion in October 2016, approximately 1/3 of GDP) give the country some room for manoeuvre in terms of liquidity.

The banking sector has been seriously weakened by the impact of the depreciation on bank debt and a deterioration in the quality of the portfolio. The proportion of currency deposits (over 50%) and loans (around 30%) is another potential area of vulnerability for the sector.


The succession to President Nazarbayev remains an area of uncertainty

Nursultan Nazarbayev, who has led the country since 1991, was re-elected for a fifth time in April 2015, with 98% of votes. Without any real opposition, his party (Nur Otan) also easily won the parliamentary elections in March 2016 (over 80% of the vote). The president carried out a ministerial reshuffle in September 2016. Doubts around the political stability within the country continue because of the risk of the conflicts that could be triggered between the various factions in power if the succession to President Nazarbayev (74) was not settled before the president was no longer capable of remaining in office.

Popular discontent is increasing because of low standards of living and the scale of corruption. Demonstrations that took place in May 2016 in protest against agrarian reform proposals, forced the president to suspend its implementation. Mass movements are however not likely given the internal security measures, boosted by fears of terrorism and religious extremists, which restrict the possibilities for any large scale protests.

Kazakhstan has a relatively better score according to the World Bank governance indicators than its neighbours, but its scores remain poor in terms of corruption and political freedoms.


Last update: January 2017

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