Economic Development and Obstacles Faced by Kazakhstan
Kazakhstan's economy is expected to continue its growth trajectory in 2025, with development institutions predicting a promising GDP growth of around 5.1%. This growth is anticipated to be driven by various sectors, including trade, manufacturing, and the non-oil sector.
The trade sector, accounting for 15.8% of Kazakhstan's GDP, performed well in 2024, with strong retail sales in food and non-food products. Exports rose by 5.1% to $68.5 billion, while imports declined by 3.3% to $48.4 billion. The manufacturing industry also saw growth, with the manufacturing industry increasing by 5.3%. Notably, the manufacturing growth was led by metallurgy at 7.2% and mechanical engineering at 6.9%.
However, economic growth in 2024 was concentrated in cities like Almaty and Astana, while oil-dependent regions such as Atyrau and Mangystau faced declining activity. The mining sector, which makes up 13.5% of Kazakhstan's GDP, saw only marginal growth of 0.1% due to oil production, which dropped by 15.2% in October.
Investment in fixed assets grew by 3.1% in the first 11 months of 2024, marking a significant slowdown compared to the previous year's 14.6%. Reduced investments dropped by 23.3% and 17.7%, respectively, contributing to the slowdown in investment growth. The decline in investments was primarily due to decreased investments in fixed assets and reduced re-export operations from Russia.
Concerns arose about the sustainability of this growth due to declining real household incomes, which fell 0.2% in the first ten months of 2024. This decline was due to decreased investments in fixed assets and reduced re-export operations from Russia. The decline in imports was primarily due to reduced machinery and equipment imports, which account for 42.6% of the total import structure.
Persistent inflation ranged between 8% and 9%, limiting domestic demand and reducing the effectiveness of government stimulus measures. Inflation is anticipated to decline but remain above the National Bank's target of 5%.
The non-oil sector was a major contributor to economic expansion in Kazakhstan in 2024, with trade, construction, and agriculture registering growth rates of 8.2%, 10.3%, and 13.4%, respectively. The government plans to reduce the budget deficit while adhering to reserve management rules, signaling a commitment to long-term stability.
It is critical to acknowledge and understand the challenges the Kazakhstan economy faces in 2025 as it strives to build on its gains and address key issues. As the economy continues to grow, it is essential to address concerns about the sustainability of this growth, declining real household incomes, and persistent inflation. The government's commitment to reducing the budget deficit and maintaining long-term stability offers a promising outlook for Kazakhstan's economy in the coming years.
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