Ethnic Kazakhs, a mix of Turkic and Mongol nomadic tribes who migrated to the region by the 13th century, were rarely united as a single nation. The area was conquered by Russia in the 18th century, and Kazakhstan became a Soviet Republic in 1936. Soviet policies reduced the number of ethnic Kazakhs in the 1930s and enabled non-ethnic Kazakhs to outnumber natives. During the 1950s and 1960s agricultural "Virgin Lands" program, Soviet citizens were encouraged to help cultivate Kazakhstan's northern pastures. This influx of immigrants (mostly Russians, but also some other deported nationalities) further skewed the ethnic mixture. Non-Muslim ethnic minorities departed Kazakhstan in large numbers from the mid-1990s through the mid-2000s and a national program has repatriated about a million ethnic Kazakhs back to Kazakhstan. These trends have allowed Kazakhs to become the titular majority again. This dramatic demographic shift has also undermined the previous religious diversity and made the country more than 70% Muslim. Kazakhstan's economy is larger than those of all the other Central Asian states largely due to the country's vast natural resources. Current issues include: developing a cohesive national identity, expanding the development of the country's vast energy resources and exporting them to world markets, diversifying the economy, enhancing Kazakhstan's economic competitiveness, and strengthening relations with neighboring states and foreign powers.
Location
Central Asia, northwest of China; a small portion west of the Ural (Zhayyq) River in easternmost Europe
Natural Resources
major deposits of petroleum, natural gas, coal, iron ore, manganese, chrome ore, nickel, cobalt, copper, molybdenum, lead, zinc, bauxite, gold, uranium
Population - distribution
most of the country displays a low population density, particularly the interior; population clusters appear in urban agglomerations in the far northern and southern portions of the country
Kazakh (official, Qazaq) 74% (understand spoken language), Russian (official, used in everyday business, designated the "language of interethnic communication") 94.4% (understand spoken language) (2009 est.)
Almaty 1.523 million; ASTANA (capital) 759,000 (2015)
- Conventional long form
- Republic of Kazakhstan
- Conventional short form
- Kazakhstan
- Local long form
- Qazaqstan Respublikasy
- Local short form
- Qazaqstan
- Name
- Astana
- Geographic coordinates
- 51 10 N, 71 25 E
- Time difference
- UTC+6 (11 hours ahead of Washington, DC, during Standard Time)
has not submitted an ICJ jurisdiction declaration; non-party state to the ICCt
Kazakhstan, geographically the largest of the former Soviet republics, excluding Russia, possesses substantial fossil fuel reserves and other minerals and metals, such as uranium, copper, and zinc. It also has a large agricultural sector featuring livestock and grain. The government realizes that its economy suffers from an overreliance on oil and extractive industries and has made initial attempts to diversify its economy by targeting sectors like transport, pharmaceuticals, telecommunications, petrochemicals and food processing for greater development and investment.
- Inflation
- 6.646%
- External debt stocks
- US$ 154,287,591,000
- Total tax rate (% of commercial profits)
- 29.2%
- Real Interest Rate
- None%
- Manufacturing, value added (% of GDP)
- 11.319%
- Current Account Balance
- US$ -5,463,716,054
- Labor Force, Total
- 9,230,814
- Employment in Agriculture
- 18.01%
- Employment in Industry
- 20.56%
- Employment in Services
- 61.43%
- Unemployment Rate
- 5.23%
- Imports of goods and services
- US$ 38,978,485,476
- Exports of goods and services
- US$ 43,626,526,088
- Total Merchandise Trade
- 46.35%
- FDI, net inflows
- US$ 6,584,614,530
- Commercial Service Exports
- US$ 6,149,068,850
grain (mostly spring wheat and barley), potatoes, vegetables, melons; livestock
oil, coal, iron ore, manganese, chromite, lead, zinc, copper, titanium, bauxite, gold, silver, phosphates, sulfur, uranium, iron and steel; tractors and other agricultural machinery, electric motors, construction materials
- Commodities
- oil and oil products, natural gas, ferrous metals, chemicals, machinery, grain, wool, meat, coal
- Partners
- China 15.1%, Russia 12.3%, France 9.3%, Germany 7.9%, Italy 6.7%, Greece 4.1% (2015)
- Commodities
- machinery and equipment, metal products, foodstuffs
- Partners
- Russia 32.9%, China 25.9%, Germany 4.2% (2015)
- Country Risk Rating
- C
- A very uncertain political and economic outlook and a business environment with many troublesome weaknesses can have a significant impact on corporate payment behavior. Corporate default probability is high.
- Business Climate Rating
- B
- The business environment is mediocre. The availability and the reliability of corporate financial information vary widely. Debt collection can sometimes be difficult. The institutional framework has a few troublesome weaknesses. Intercompany transactions run appreciable risks in the unstable, largely inefficient environments rated B.
- Expected increase in oil exports thanks to exploitation of Kashagan oilfield
- Abundant foreign direct investments
- Strategically positioned between Asia and Europe
- Economy reliant on commodities (oil, gas, uranium, and iron)
- Fragility of the banking system
- Persistent shortcomings in legal and institutional framework
- Risk of political instability if succession to President Nazarbayev is rushed
Following two years of marked slowing, growth is expected to gradually pick up in 2017, driven by the oil and gas sector. The re-opening of the Kashagan Field in October 2016, after a three year shutdown, should enable a gradual increase in oil production, from less than 1.6 million bpd in 2016 to 1.8 million in 2017 according to OPEC.
In addition, major public infrastructure investment projects, in particular in the transport sector in the context of the “one belt, one road” initiative launched by China, will boost the construction sector. Activity in the services sector should remain positive, especially tourism, which could benefit from the knock-on from the international EXPO 2017 taking place in Astana in June.
There will be a greater contribution from foreign trade towards growth than in 2016 thanks to increased oil and gas sales.
Consumption (over 50% of GDP) is expected to be boosted by the improved jobs market, thanks in particular to legislation that came into force at the beginning of 2016, as well as by slightly less restrictive budget policy. The central bank is likely to continue the gradual relaxation of monetary policy started in 2016 (rates cut from 17% to 12%) and thus boost domestic demand.
Inflation, under the impact of food prices, is expected to ease thanks to a slowdown in price rises in Russia (the leading source of imported goods) and a firming up of its currency, the tenge. It is however likely to remain in excess of the central bank’s rate ceiling (6-8%).
Non-oil and gas revenues are not expected to increase dramatically in the low growth. Nevertheless, an increase in output together with higher oil prices will help boost tax revenues from the oil and gas sector (more than half of the total). The State is likely, in a relatively tense social climate, to slightly relax its social expenditure policies. Its infrastructure projects are expected to continue and be mostly financed by the (NFRK) oil and gas fund, thus limiting the impact on the budget. The deficit could thus shrink.
Export revenues from the oil and gas sector (over 70% of the total) should increase as volumes and prices increase despite the slow rate of growth of demand in the country’s leading export markets: the EU, China and Russia. Imports, again limited by weak domestic demand, should not pose a problem for the current account balance. In addition, tourism revenues should feel the benefits of the upcoming international exhibition. There should therefore be an improvement in the current account balance.
Following the massive depreciation (-50% against the dollar) recorded in 2015 in response to the introduction of a floating exchange system, the firming of the tenge exchange rate during 2016 should continue in 2017, provided oil and gas prices do not fall again. The country is still vulnerable to external shocks, with bank and corporate debt being mainly denominated in foreign currency. The level of its currency reserves (5 months of imports, excluding gold) and its sovereign fund assets (USD 62 billion in October 2016, approximately 1/3 of GDP) give the country some room for manoeuvre in terms of liquidity.
The banking sector has been seriously weakened by the impact of the depreciation on bank debt and a deterioration in the quality of the portfolio. The proportion of currency deposits (over 50%) and loans (around 30%) is another potential area of vulnerability for the sector.
Nursultan Nazarbayev, who has led the country since 1991, was re-elected for a fifth time in April 2015, with 98% of votes. Without any real opposition, his party (Nur Otan) also easily won the parliamentary elections in March 2016 (over 80% of the vote). The president carried out a ministerial reshuffle in September 2016. Doubts around the political stability within the country continue because of the risk of the conflicts that could be triggered between the various factions in power if the succession to President Nazarbayev (74) was not settled before the president was no longer capable of remaining in office.
Popular discontent is increasing because of low standards of living and the scale of corruption. Demonstrations that took place in May 2016 in protest against agrarian reform proposals, forced the president to suspend its implementation. Mass movements are however not likely given the internal security measures, boosted by fears of terrorism and religious extremists, which restrict the possibilities for any large scale protests.
Kazakhstan has a relatively better score according to the World Bank governance indicators than its neighbours, but its scores remain poor in terms of corruption and political freedoms.