Bolstering growth in Kazakhstan

Kazakhstan’s economic performance has been impressive. The size of the economy has almost tripled since the turn of the century, and growth has been relatively inclusive. To further its economic development, Kazakhstan has set the ambitious target of belonging to the 30 most developed countries by 2050. Compared to its peers, Kazakhstan appears well placed to catch up with OECD income levels by then. However, bolstering growth is needed if the country’s high ambitions are to be realised.This chapter analyses past growth as well as the challenges and perspectives for future economic development. Growth remains very dependent on external conditions, most notably on oil prices and the economic conditions in some key trade partners. The challenges to economic stability posed by the oil-led growth are dealt with in a broadly adequate way, but financial sector weakness and exchange rate uncertainty have been weighing on private sector development. Prudent management of oil-related revenues has avoided large negative repercussions for non-oil economy activity. However, given the small size of the manufacturing sector, continuous efforts to diversify the economy are warranted, so as to strengthen growth perspectives and prepare for the eventual fading-out of the oil boom. Shifting labour to more productive sectors could considerably boost growth, but raising productivity is ultimately the key to sustaining higher growth. This would require raising investment from its current low levels. Future growth should make economic activity more sustainable to meet the country’s own targets and to avoid a further aggravation of the current high toll on the environment if the economy expands at the envisioned high rate.