Kazakhstan faces serious economic challenges in 2025 including budget deficits, rising taxes, increasing utility and food prices, and the removal of fuel subsidies. These factors suggest that the year will be far from easy. Experts are actively seeking solutions to prevent a potential economic crisis.
Kazakhstan often studies global practices when planning reforms and tries to adapt them to local realities. However, the “economic success” of any country depends on numerous factors. Simply following in another nation’s footsteps does not guarantee success.
Countries also tend to repeat the mistakes of others, which often lead to economic crises. Kazakhstan’s current economic situation bears similarities to the Great Depression in the United States, which occurred almost a century ago.
Key Causes of the Great Depression:
• The stock market crash (“Black Thursday” on October 24, 1929), driven by excessive speculation and artificially inflated stock prices;
• Banking system problems caused by over-lending to speculators without sufficient reserves, leading to a loss of trust and mass withdrawals;
• Overproduction of goods and declining purchasing power among the population due to low wages;
• Income inequality, where the majority of wealth was concentrated in the hands of a small group;
• Weak economic regulations that allowed monopolies and financial bubbles to form;
• Protectionist policies (e.g., the Smoot-Hawley Tariff Act of 1930), which imposed high import tariffs and provoked retaliatory measures from other countries.
Similarities in Kazakhstan:
• Excessive consumer debt due to high prices for goods and services and rising inflation (current consumer loans surpass business loans);
• Low wages tied to limited economic diversification and technological lag;
• High income inequality distorting data on average salaries and actual household incomes;
• A shortage of stable, high-quality jobs and a high number of NEET (Not in Education, Employment, or Training) youth;
• An increase in fraudulent schemes, financial pyramids, and speculative activities.
How the U.S. Overcame the Crisis: Thanks to President Franklin D. Roosevelt’s “New Deal” program, the U.S. emerged from the Great Depression stronger. Large-scale infrastructure and construction projects reduced unemployment and improved living standards. Some of the most notable projects include:
• Hoover Dam (1931–1936), a major hydroelectric project;
• Golden Gate Bridge (1933–1937), one of the world’s largest bridges;
• Tennessee Valley Authority (1933), which built dams, hydroelectric plants, and irrigation systems to develop rural areas;
• Civilian Conservation Corps (1933–1942), which focused on reforestation, building national parks, roads, and bridges;
• Blue Ridge Parkway (1935), a large highway connecting U.S. national parks;
• Bonneville Dam (1933–1937), aimed at improving navigation and hydroelectric power generation.
Recommendations for Kazakhstan: Kazakhstan is home to over 90 cities, including 20 classified as single-industry towns (monotowns), with a population of about 1.4 million people. However, living standards in these towns lag significantly behind regional centers and major cities.
Economic stagnation in some monotowns has led residents to seek better opportunities elsewhere. Sociological surveys indicate that over 50% of regional populations are considering moving to Kazakhstan’s megacities in the near future.
Given that construction is one of the fastest-growing sectors in Kazakhstan, launching large-scale housing projects and related infrastructure in major cities could act as a key driver during economic downturns. These initiatives would also serve as “magnets” to attract residents from struggling monotowns.
Additionally, the potential of monotowns can be harnessed to boost the country’s transport, logistics, and agricultural sectors. Many monotowns already have well-developed transport infrastructure, and existing buildings could be repurposed as warehouses or used for vertical farming projects inspired by U.S. practices.
Prepared by Yerlan Karimov, Independent Expert, exclusively for www.economyKZ.org
