Economy of Kazakhstan

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Template:Economy of Kazakhstan table


Kazakhstan, the second largest of the former Soviet republics in territory, possesses enormous untapped fossil fuel reserves as well as plentiful supplies of other minerals and metals. It also has considerable agricultural potential with its vast steppe lands accommodating both livestock and grain production. 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.

Economy: In Greater Depth

In 2000, 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. The government is predicting GDP growth of about 10% in 2001, as well. 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.

Kazakhstan's monetary policy has been well-managed. Its principal challenges in 2001 are to manage strong foreign currency inflows without sparking inflation. Inflation has, in fact, stayed under control, registering 9.8% in 2000, and appears 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 is about $12.5 billion, $4 billion of which is owed by the government. This amounts to 69% of GDP, well within manageable levels.

The upturn in economic growth, combined with the results of earlier tax and financial sector reforms, 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 (VAT) from 20% to 16% and reduce social (payroll) taxes as of July 2001. Kazakhstan's stronger budget position and strong export earnings earned it credit ratings upgrades from Moody's, S&P, and Fitch during 2001.

Oil and gas is the leading economic sector. In 2000, Kazakhstan produced 35,252,000 metric tons of oil (700,000 barrels per day), 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 (800,000 barrels per day). 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 the Government of Kazakhstan, and 5% by Lukarco of Russia. The Karachaganak gas and gas condensate field is being developed by BG, Agip, ChevronTexaco, and Lukoil. The Agip-led Offshore Kazakhstan Consortium has discovered a potentially huge oil field, Kashagan, 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.

Kazakhstan instituted an ambitious pension reform program in 1998. By July 2001, Kazakhstanis had contributed more than $1 billion to their own personal pension accounts, most of which is 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 ABN AMRO, Citibank, and HSBC.


Household income or consumption by percentage share:

  • lowest 10%: 3.3%
  • highest 10%: 26.5% (2004 est.)

Agriculture - products: grain (mostly spring wheat), cotton; livestock

Industrial production growth rate: 10.6% (2004 est.)


  • production: 66.82 TWh (2003)
  • consumption: 62.21 TWh (203)
  • exports: 4.975 TWh (2003)
  • imports: 2.506 TWh (2003)

Electricity - production by source:

  • fossil fuel: 84.3%
  • hydro: 15.7%
  • nuclear: 0%
  • other: 0% (2001)


  • production: 1.2 million bbl/day (2004 est.)
  • consumption: 189,400 bbl/day (2003 est.)
  • exports: 890,000 bbl/day (2003)
  • imports: 47,000 bbl/day (2003)
  • proved reserves: 26 billion bbl (1 January 2004)

Natural gas:

  • production: 11.6 billion cu m (2004 est.)
  • consumption: 14.3 billion cu m (2001 est.)
  • exports: 11.01 billion cu m (2003 est.)
  • imports: 8.696 billion cu m (2003 est.)
  • proved reserves: 1.8 trillion cu m (1 January 2004)

Exports - commodities: oil and oil products 58%, ferrous metals 24%, chemicals 5%, machinery 3%, grain, wool, meat, coal (2001)

Imports - commodities: machinery and equipment 41%, metal products 28%, foodstuffs 8% (2001)

Debt - external: $26.03 billion (2004 est.)

Exchange rates: tenges per US$1 - 136.04 (2004), 149.576 (2003), 153.279 (2002), 146.736 (2001), 139.02 (January 2000), 119.52 (1999), 78.30 (1998), 75.44 (1997), 67.30 (1996), 60.95 (1995)

See also

es:Economía de Kazajstán pt:Economia do Cazaquistão