Kazakhstan is the largest landlocked country in the world with one of the lowest population densities. It is strategically located in the middle of the Eurasian continent at the crossroads between the People’s Republic of China (PRC) and Western Europe, connected by road, rail, and a port on the Caspian Sea. Kazakhstan is a middle-income developing country with high economic dependence on energy resources.
Kazakhstan is the largest landlocked country in the world with one of the lowest population densities. It is strategically located in the middle of the Eurasian continent at the crossroads between the People’s Republic of China (PRC) and Western Europe, connected by road, rail, and a port on the Caspian Sea. Kazakhstan is a middle-income developing country with high economic dependence on energy resources. The country possesses the ninth-largest oil reserves in the world, which constituted 21% of its gross domestic product (GDP) in 2020 and about 73% of its exports in 2022.
As a result of the coronavirus disease (COVID-19) pandemic, the country’s GDP fell for the first time in 2 decades, down by 2.5% in 2020. It bounced back by 4.3% in 2021 and is estimated, according to the Asian Development Bank (ADB), to register a GDP growth of around 3.0% in 2022 as a result of improved domestic activity, recovery of the global oil demand, continued fiscal support measures, and a successful vaccination program tackling the COVID-19 pandemic.
In February 2021, Kazakhstan updated its National Development Plan to 2025, which elaborates its medium-term vision of economic diversification through reforms of the agro-industrial and transport sectors, promotion of small and medium-sized enterprises (SMEs), plus development of tourism and other sectors. This plan’s key objectives are to raise productivity as a driver, and help the country become one of the 30 richest economies by 2030, through increasing private investments post-COVID. The government finalized its New Economic Policy (NEP), which was approved in September 2022 following the President’s address to the nation. Its main principles stipulate (i) private property guarantees, (ii) a favorable investment climate, (iii) fair competition, (iv) public finance management, (v) lower administrative barriers, (vi) a smaller state role in the economy, and (vii) social protection. The NEP’s implementation measures are being developed by the Agency for Strategic Planning and Reforms of Kazakhstan. Estimates show annual investments are now at about 20% of GDP, compared with the 30 richest countries’ average of 28%. Sustained government effort is therefore expected to improve the enabling environment for private investments.
However, productivity growth will depend on the extent to which upstream measures liberalize the economy, improve fiscal and debt management, enforce the new Environmental Code of 2021, and align with downstream coordination of private and public investments.
The Economist Intelligence Unit’s Infrascope report of 2019 ranks Kazakhstan’s PPP-enabling environment at 11th among 21 Asian countries, seventh in terms of overall investment and business climate, eighth in terms of institutions, 11th in terms of financing environment, 13th in terms of regulations, and 15th in terms of market maturity.
