Kazakh Economy Demonstrates Adaptability While Navigating Global Storm, Says Economy Minister

ASTANA — Minister of National Economy Alibek Kuantyrov outlined the challenges the Kazakh economy faces in light of tense geopolitical realities and how the government is addressing them in an interview with the country’s Kazakhstanskaya Pravda newspaper on Aug. 21.

Minister Kunatyrov said that roads are the key economic arteries. It is important to invest in their construction. Photo credit: kazpravda.kz.

According to Kuantyrov, Kazakhstan has demonstrated adaptability while navigating through the global turbulence resulting from the pandemic, high inflation, and the Russian-Ukrainian conflict, all of which have negatively impacted the supply chain.

“Last year’s GDP recorded 3.2% growth, exceeding our initially modest forecast,” he said. 

Kuantyrov said that the Kazakh economy has demonstrated even better results so far this year. “For the first half of the year, real GDP growth reached 4.8%,” he said, adding that the target economic growth this year is at 4.5–5% and, in the medium term, up to 6%.

Addressing inflation

Kuantyrov acknowledged that high inflation remains a concern. 

“Inflation primarily resulted last year due to external factors connected with global processes and an imbalance of supply and demand. As a result, a package of policies to manage and reduce inflation has been in place since 2022. This year, efforts are underway to bolster the domestic market with food products. We can immediately observe how inflation fell from 21.3% in February to 14% in July,” Kuantyrov said. 

The minister said that by the year’s end, the goal is for inflation to reach 9.5-10%. He elaborated that the government’s work is focused on import substitution. 

“This concerns not only food but also construction materials and textiles. I often visit the regions to understand which areas require additional funding. For example, the positive experience of the North Kazakhstan Region in the production of dairy products is now being applied in the West Kazakhstan and Akmola Regions,” he said. 

Supply chain disruption and Middle Corridor

Kuantyrov addressed the supply chain disruption, which was a major shock to Kazakh businesses. The circumstances prompted the country to seek alternative routes, such as the Trans-Caspian International Transport Route (TITR), known as the Middle Corridor, which stretches from Southeast Asia and China to Kazakhstan, the Caspian Sea, Azerbaijan, Georgia, and European countries.

“Transit is one of the important sources of income, especially for landlocked countries. We have enormous transit potential. For example, the TITR’s potential is anticipated to exceed more than 20 million tons of cargo per year by 2030, a tenfold increase from the current level,” Kuantyrov said. 

According to the minister, plans are being implemented to expand several existing bottlenecks on this route, as the foundation for integrating Kazakh infrastructure into global transport and logistics flows has been laid. The country also intends to speed the development of a container hub, a multipurpose marine terminal, and the modernization and renewal of existing port infrastructure. 

He added that executing a large railway project on the Dostyk-Moiynty section, as well as Bakhty-Ayagoz, Darbaza-Maktaaral, will greatly enhance throughput and provide an opportunity to substantially increase domestic product exports. 

“We realize that the efficiency of economic reforms, the achievement of a balanced industrial structure, and the establishment of favorable business conditions heavily rely on the road network’s accessibility. Roads serve as key economic arteries. It is important to invest in their development,” Kunatyrov said. 

The minister said that according to World Bank estimates, boosting people’s access to their workplaces by developing the road network by 1% can result in a 0.3-0.4% rise in the number of companies and jobs. Additionally, more than 30% of each tenge invested in road infrastructure is returned to the government through taxes.

Foreign trade 

The minister said that Kazakhstan achieved impressive investment and foreign trade results with a record $28 billion foreign direct investment in 2022, marking the first such achievement in a decade. According to Kuantyrov, the country takes the development of bilateral trade, economic, and investment relations seriously with all its partners. 

“Our efforts under challenging conditions have been validated by international rating agencies, such as Standard & Poor’s, Moody’s, and Fitch, which have rated Kazakhstan’s sovereign credit as investment reliable,” he said, adding that in March, S&P updated its country outlook, changing it from negative to stable.

According to Kuantyrov, financial stability is assured by sufficient foreign reserves, totaling $94.4 billion as of the end of July and $34.2 billion in gold and foreign exchange. The National Fund’s assets climbed to $60.2 billion.

With recession looming over major world economies, Kuantyrov said that the country considers these challenges, and its forecasts are conservative with an optimistic outlook. 

While developing the country’s forecast, the ministry studies the data of international organizations such as the International Monetary Fund, the World Bank, and the Asian Development Bank, among other financial institutions. When planning the basic parameters of the budget, such as oil price and inflation, the ministry calculates the “golden mean” to create a consensus forecast.

“We have no other choice but to set more ambitious goals and look for new opportunities,” he said. 

Investment climate 

Kuantyrov also discussed the investment climate as one of the crucial factors of sustainable economic growth. He said that the country is doing systematic work in this regard. He mentioned the Concept of Investment Policy until 2026, which aims to create a new investment cycle and revise the investment attractiveness strategy in light of emerging trends such as Environmental, Social, and Corporate Governance standards.

“There are exemptions from customs duties, various tax incentives, and in-kind grants. Under the Investment Agreement, the stability of legislation is ensured for 25 years to implement investment projects worth nearly $50 million. Each project receives individual conditions, and investors are assigned specific obligations,” he said. 

Kuantyrov mentioned the Astana International Financial Centre, which offers investors unprecedented business conditions, including tax breaks, flexible labor rules, and the ability to conduct operations in any currency. 

“The procedures for opening and running a business have been simplified. Most services are available online through the egov.kz website,” he added. 

Kuantyrov noted that the country had established a visa-free regime for investors from 76 countries to foster greater business activity. The government is working hard with a nationwide pool of investment projects in non-primary areas of the economy. 

“A single pool of investment projects has been developed, consisting of 873 projects worth 28.1 trillion tenge ($61.8 billion) that will create over 138,400 jobs with the participation of over 30 countries. This year, 281 facilities worth 1.97 trillion tenge ($4.3 billion) are scheduled to open, providing over 32,000 jobs,” he said. 

Kuantyrov said that efforts are being made to relocate major businesses and international corporations to Kazakhstan that intend to cease operations in Russia and Belarus. The list includes over 400 large companies from 38 countries, with 70 companies completing the relocation process to the country. 

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