ASTANA – Making fiscal policy more pro-poor, improving the quality of education, and strengthening climate resilience are critical priorities for policymakers to reduce poverty and inequality in Kazakhstan, according to the Kazakhstan Poverty and Equity Assessment 2024 report, published by the World Bank on Dec. 12.
Photo credit: Center for Global Development.
Kazakhstan’s economy has shown robust growth since 2006, with an average annual rate of 4.7%. This has improved living standards and elevated the country to upper-middle-income status, lifting 5.9 million people out of poverty and reducing the poverty rate from 49.5% to 8.5% over the same period.
Consumption growth, fueled by higher labor incomes, has been the main driver of poverty reduction. However, the report identifies three distinct phases in Kazakhstan’s poverty reduction journey. Between 2006 and 2013, poverty declined rapidly but saw a partial reversal during the 2014-2016 economic downturn, which increased poverty rates. From 2016 to 2021, poverty reduction resumed but at a slower pace.
The middle class has expanded significantly since 2006, increasing 2.5-fold to reach 67% of the population in 2021, compared to 26% in 2006. However, growth stagnated after 2013 as structural transformation and productivity gains slowed. The report underscores the importance of diversifying Kazakhstan’s economy, which remains heavily dependent on commodity exports.
Despite nationwide progress, significant regional and demographic disparities persist. Rural poverty rates (11.4%) remain notably higher than urban areas (6.6%), with the Turkistan Region accounting for a disproportionately large share of the poor. Additionally, poverty is increasingly concentrated among children and large families, and children now represent 40% of the poor population, up from 27% in 2006.
Income inequality is also on the rise. While Kazakhstan’s Gini index remains relatively low compared to other upper-middle-income countries, it increased from 24.3 in 2015 to 26.4 in 2021, driven by faster income growth among high-income households. The report notes that fiscal policies, including taxation and social spending, have reduced inequality and poverty but could be more impactful if designed with a stronger pro-poor focus.
Investing in human capital remains vital for sustaining growth and reducing poverty in the long term. While access to education is widespread, significant disparities in quality and outcomes persist. The Human Capital Index reveals that children in Kazakhstan achieve only 53-64% of their productivity potential, with socio-economic and regional inequalities exacerbating these challenges.
Climate-related risks present additional challenges, particularly for rural and vulnerable populations. Although Kazakhstan’s exposure to climate risks is lower than that of neighboring countries, its vulnerability is amplified by its weak adaptive capacity.
The World Bank report recommends improving fiscal policies’ redistributive performance through progressive taxation and more targeted social transfers to address these issues. Enhancing education quality, especially for disadvantaged groups, is essential to level the playing field and prepare the workforce for future opportunities. Finally, strengthening resilience against climate shocks through infrastructure investments and targeted support for low-income households will be critical for safeguarding the most vulnerable populations.
