ASTANA — Kazakhstan’s economy is experiencing a slowdown in growth across its key sectors, according to a new report released on April 27 by the Halyk Finance analytical center, based on data for the first quarter of 2026.
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Analyst Timur Dilmukhametov noted that Kazakhstan’s economy grew by 3% year-on-year in the first quarter of 2026, compared to 5.6% year-on-year in the same period of 2025.
“The slowdown in growth rates is observed across all key sectors except agriculture. This is largely due to a significant decline in production in the mining industry, particularly in the oil and gas sector, which, through a multiplier effect, impacts related industries,” he said.
The short-term economic indicator index, which reflects the performance of key sectors, slowed to 2.5% year-on-year, compared to 8.3% in the same period last year.
Uneven sectoral performance
Across individual industries, growth and decline remain uneven. Industrial output has moved into negative territory, declining by 0.7% year-on-year. The main pressure came from the oil sector, where production fell by nearly 20% year-on-year over the three-month period, according to the Energy Ministry.
In contrast, the manufacturing sector grew by 8.5% year-on-year, supported by machinery production (+21.9%) and food manufacturing (+12.6%), while metallurgy recorded negative dynamics (-6.3%).
The transport sector continues to demonstrate double-digit growth rates, significantly outpacing overall GDP growth. However, growth slowed from 21% in the first quarter of 2025 to 12.8% in the same period this year, largely due to a high base effect and a combination of external and internal factors.
In construction, growth rates eased to 14.8% year-on-year from 16.9% in the first quarter of 2025, driven by a slowdown in residential and non-residential building activity, while infrastructure construction, by contrast, increased.
A flat phase?
Formally, Kazakhstan’s economy continues to grow, but this growth increasingly appears on paper, failing to generate either an investment boom or a noticeable revival in business activity.
In a comment to The Astana Times, financial analyst Rasul Rysmambetov describes this phase as a “flat economy,” or a plateau. This is a situation where growth exists, but it is not accompanied by acceleration.
“It is similar to what happens in sports, when an athlete hits a plateau when no exercise delivers further gains in strength or mass. At such moments, you need to push through, change your routine, and adjust your lifestyle and nutrition,” he explained.
At the same time, a slowdown in fiscal stimulus was also observed in the first quarter of 2026.
According to Rysmambetov, a significant share of current growth is driven by government spending, the resource sector, and a limited number of large-scale projects. While this creates an effect of stability, it does not generate a broad-based investment impulse.
“Small and medium-sized businesses are also not a source of rapid growth. The government needs to rethink regulatory constraints that are not always visible. Changes are needed in sectoral policies. Liberalism should not apply only to tariffs, but also to regulation,” he said.
Outlook for the year
According to the Halyk Finance macroeconomic report, real household incomes showed negative dynamics, which has affected trade unevenly.
Overall trade grew by 4.8% year-on-year, compared to 6.3% in the first quarter of 2025, while retail trade growth slowed to 2.8% year-on-year, reflecting declining household incomes, slower growth in consumer lending, and inflationary pressures.
This gap is increasingly felt by the population. In reality, many Kazakh citizens are beginning to feel that their purchasing power is shrinking. According to Rysmambetov, this gap has become structural. While the economy continues to grow, income growth is lagging behind inflation, particularly in essential consumption categories.
“High borrowing costs, cautious employers, and rising uncertainty are also factors. As a result, a model of a cautious consumer is forming, where people spend less, delay decisions, and reduce risks. This, in turn, weakens domestic demand and creates a feedback loop,” he said.
In his view, even when growth is present, it is distributed unevenly and does not easily translate into broad-based prosperity.
“For it to affect the entire economy, it takes time,” he added.
Timur Dilmukhametov forecasts that the nation’s GDP growth will reach 4.8% year-on-year in 2026, compared to the government’s forecast of 5.4%.
Amid supply shocks in global markets linked to the war in the Middle East, the average oil price in 2026 is expected to reach $85 per barrel, up from an average of $69 in 2025. However, higher oil prices are expected to be offset by a decline in production and exports compared to 2025, when growth was driven by the launch of the Future Growth Project at Tengiz.
“Our estimate for oil production in 2026 has been revised down to 95 million tons [from 99.4 million tons in 2025]. At the same time, the realization of this forecast is constrained by significant risks related to the integrity of export infrastructure,” reads the report.
Halyk Finance also maintains its inflation forecast at 10.5 – 11.5% year-on-year by the end of 2026. The key drivers of inflation acceleration in the coming months include the lifting of the moratorium on utility tariff increases and fuel prices, as well as the weakening of the national currency.
“The main risks associated with these factors relate to uncertainty regarding the scale and timing of tariff and fuel price increases, while the tenge, in our view, remains overvalued relative to its fundamental level,” the report reads.
The center also expects the National Bank to keep the base rate unchanged at its June meeting.
A way forward
According to Rysmambetov, there is a way out of the situation, but it requires a shift in economic logic. The current model, while stabilizing in many respects, does not create conditions for accelerated growth.
“Today, the economy is largely managed through fiscal instruments: taxation, redistribution, and expenditure control. This creates order, but not growth incentives,” he said.
Rysmambetov noted that the government is now seeking to act as an active co-investor for large projects, similar to previous approaches involving the Development Bank of Kazakhstan. He expects that by the end of the year, the state may expand its focus beyond infrastructure to include productivity, technology and value-added production.
“It is important to restore incentives for businesses to expand. Right now, many are focused on optimization and survival. In such an environment, it is difficult to expect an investment breakthrough. How can this be stimulated? Through taxes and credit,” he said.
