Kazakhstan’s Economic Development in 2024: Key Insights

As the year comes to an end it is customary to review the past months and plan for the future. In line with this tradition we would like to present an overview of Kazakhstan’s economic performance in 2024 and outline expectations for 2025. This analysis reflects current challenges and opportunities.

The year of 2024 has been marked by moderate growth for Kazakhstan’s economy. However, external and internal factors created significant hurdles. While certain sectors showed positive trends, declining household incomes, slower oil production, and weak investment activity weighed on overall growth.

GDP Growth and Key Drivers

Kazakhstan’s GDP grew by 4.4% over the first 11 months of 2024. The non-oil sector was the primary growth engine expanding by 5.1% year-on-year. Notable increases were seen in trade (+8.2%), construction (+10.3%), and agriculture (+13.4%).

Trade showed exceptional growth accounting for 15.8% of GDP. This was driven by strong sales of non-food goods (+9.4%) and food retail (+9.0%). However, sustainability is uncertain, given the 0.2% decline in real incomes and reduced imports throughout the year.

The manufacturing sector, contributing 12.4% to GDP, grew by 5.3%. Key contributors were metallurgy (+7.2%) and machinery (+6.9%). Meanwhile, the mining sector with a 13.5% share of GDP stagnated at 0.1% growth due to lower oil production. Annual oil output is now forecasted at 87.8 million tons, down from the earlier projection of 90.3 million tons, following maintenance at major fields.

Foreign Trade

Foreign trade remained vital to Kazakhstan’s economy. For January–October, 2024 the trade balance posted a $20.1 billion surplus, a 33.4% year-on-year increase. This was driven by a 5.1% rise in exports, reaching $68.5 billion, and a 3.3% drop in imports, totaling $48.4 billion.

The decline in imports was largely due to reduced machinery and equipment purchases, reflecting lower capital investment in mining and decreased re-exports to Russia.

Investment Activity

Capital investments grew by only 3.1% in January–November, 2024 – a sharp slowdown from 14.6% in 2023. Investments in mining fell by 23.3%, and trade saw a 17.7% decline. Growth relied heavily on government funding and loans, highlighting reduced private sector participation.

Social Aspects

Real household incomes declined by 0.2% over the first 10 months of 2024 putting pressure on domestic demand. Inflation remained high at 8-9%, further eroding purchasing power. This dampened the effectiveness of stimulus measures, such as government support for agriculture and construction.

Regional Disparities

Economic growth was uneven across regions. Almaty and Astana led the way driven by trade and services. In contrast, oil-dependent regions like Atyrau and Mangystau faced declining activity due to weak investment.

Challenges and Prospects

Kazakhstan’s GDP growth is projected to reach 4.5% in 2024 supported by strong trade and modest gains in manufacturing. For 2025 development institutions forecast a more optimistic 5.1% growth. Our assessment suggests 4.5% growth, driven by increased exports and expanded petrochemical production.

Inflation will likely decline but remain above the National Bank’s 5% target. Achieving this goal will require strict monetary policies and fiscal reforms. Budget plans prioritize deficit reduction and reserve preservation, though debt servicing costs are rising due to high domestic interest rates.

The 2024 results highlight the need for a comprehensive approach to economic development. Strengthening the non-oil sector improving investment conditions, and raising household incomes should be key priorities for 2025. Coordinated efforts between the government and businesses will be essential to overcoming current challenges and ensuring sustainable growth.