Kazakhstan Economy

By | October 25, 2021


In the aftermath of the dissolution of the Soviet Union and the conquest of independence, Kazakhstan’s economy underwent a sudden upheaval. Mainly destined, in the context of the Soviet economy, for agricultural production and heavy industry, the country suffered a serious decline in the early nineties: global production experienced very marked drops, especially in the industrial sector, while the rate of inflation has soared. In 1995 a heavy recession hit the country due to the suspension of public investments, the frequent stoppages of industrial production (mainly due to interruptions in the supply of electricity, almost all imported, that Kazakhstan has not always been able to pay off promptly) and the slowdown in foreign investment. The gradual economic reforms, introduced with the support of the International Monetary Fund and the World Bank, and above all the possibility of counting on the enormous mineral and energy riches have allowed the country to reactivate the market and international trade and already in 1996 the economy started to grow again. Even the second recession (1998-99), which had slowed the liberalization of the economy by highlighting the imbalances between the productive sectors, the disorganization of the markets and the activities of illegal pressure groups, was however overcome thanks to the increase in oil revenues. and the increase in foreign investments. The GDP recorded in 2008 was US $ 132,229 million and the GDP per capita it reached US $ 8,502 (2008), the highest in the region and slightly lower than the Russian one. However, there are large disparities in income according to the regions and sectors in which workers are employed. In recent years, the country has found itself having to face various problems of a political and economic nature, to which it has been able to find adequate solutions: for example, the question relating to the activities of the Baikonur cosmodrome, the fulcrum of the Soviet space program, to which followed under the control of Russia and upon payment of a rent to the host country; the problem of the export of hydrocarbons, due to which Kazakhstan found itself in the need to reach a stable and satisfactory agreement with Russia, differentiating the access routes to the sea: through the establishment of the Caspian Pipeline Consortium, Kazakhstan, together with Russia, Oman and some Western oil companies, has upgraded the oil pipeline that leads from Tengiz to Novorossijsk, on the Black Sea, adding another “corridor” compared to the one already active on the other side and which allows the connection with the Chinese region of Xinjiang, through the Atasū-Alashankou plant (built between 2004 and 2005). Or, again, the age-old question relating to the partition of the Caspian Sea, where extraordinarily rich hydrocarbon deposits had been discovered: in 1998, Russia and Kazakhstan signed an agreement on the demarcation of the North Caspian Sea and in 2004 a project was established to the exploitation of offshore fieldsby Kashagan. The expansion plan of the oil transport system provides for an expansion along two directions: towards the east, with the continuation of the connection with China, and towards the west, with the connection of the Kazakh plants to the Baku-T’blisi-Ceyhan oil pipeline which leads to the Mediterranean. Despite the efforts undertaken, there are still several brakes on the country’s ability to attract foreign capital, mainly due to the control and state tax burden on investors, which require, among the measures to be adopted, the containment of protectionist measures. For the period 2003-2015, however, the government has launched a strategic development and innovation plan aimed at strengthening finance and services and diversifying the economy, favoring the non-mining industry.


After the war, agriculture underwent a significant increase in the area used, especially after the major plowing of the period 1954-62 (over 23 million ha). Although limited by the climatic conditions of aridity, Kazakhstan had assumed, in the federal context, an essential role as a supplier of both vegetable and zootechnical products. Wheat, which affects most of the crops, had made the country the second largest granary, after Ukraine, in the entire Soviet area. Other agricultural products are oilseeds and cotton, grown in the arid regions of the South, vegetables, fruit, potatoes and tobacco spread in the foothills with a cooler climate and more fertile soils; the cultivation of sugar beet is also relevant. Livestock farming is widespread everywhere: karakúl, in particular, give a fine wool with which astrakhan furs are made) and goats in the southern areas). Poultry farming and fishing are also widespread, though threatened by the continuous contraction of the Aral Sea basin. This latter issue also affects the availability of water for crops. In general, the entire agricultural sector shows considerable difficulties in recovery. The production as a whole is also strongly affected by the bad environmental conditions of the country, where there are very extensive and serious pollution phenomena (water, atmospheric and soil) (see Lake Balhaš) and above all by the lack of an incisive reform., able to modernize a sector still in the Soviet era.


The greatest wealth of Kazakhstan consists of its mineral deposits. The country is the second Asian producer and among the first in the world of aluminum, lead, silver and zinc; bauxite, gold, copper, nickel, manganese, chromite, phosphorite, asbestos, nepheline and above all iron ores (mainly in the Kustanaj), coal (mostly in the Karagandy basin), oil (mainly in the Emba valley on the Mangyšlak peninsula and in the Caspian Sea) and natural gas. The deposits feed numerous industrial complexes, operating above all in the steel and metallurgical (cast iron, steel, copper, aluminum, etc.), mechanical and chemical sectors; the manufacturing and food sectors, on the other hand, are backward, practically decaying with independence because they are not very competitive. According to allcountrylist, the construction sector, on the other hand, is growing, thanks to government investments to upgrade infrastructure, especially oil.


The financial system is rapidly evolving as are trade, services and telecommunications. The country’s trade balance is in surplus. The main countries to which Kazakhstan looks for exports are the European Union (Italy, France, the Netherlands, United Kingdom), Switzerland, Russia and China, towards which oil, iron, steel, copper, chemical products are directed.. For imports, Russia, China, the European Union (Germany, Italy, France) and the United States, from which machinery and equipment, food, pharmaceutical and textile products come. Among the objectives that the Kazakh government has set itself to achieve is also the greater diversification of trading partners.

Kazakhstan Economy