Economy

Kazakhstan: 2024 Economic Overview

How will the largest economy in Central Asia fare in 2024? Numbers look good for Kazakhstan’s USD200 billion economy, though there are risks as well.

Image credit: Shutterstock / Alexey_Arz

The year 2023 was a challenging one for the Kazakhstani economy, fraught with geopolitical complications involving Russia, fluctuating energy prices, and internal political reforms championed by President Kassym-Jomart Tokayev.

Yet almost miraculously in all cases, Astana managed to resiliently either benefit from the ongoing challenges or—at the very least—stay out of harm’s way.

Indeed, the country’s actual GDP growth in 2023 (4.6%) overshot the International Monetary Fund’s forecasts by half a percentage point. “The growth for 2024 is forecasted at 4.2%,” according to the Astana Times, indicating a “a positive economic growth outlook.”

Here is a breakdown of some of the most notable trends in the Kazakhstani economy which began in 2023 and will likely continue to shape the Central Asian giant’s economy in 2024.

Farewell Moscow!

The largest economy of Central Asia found itself in a dilemma in 2023 in the wake of the war in Ukraine. Despite longstanding diplomatic ties with Moscow, Kazakhstan increasingly had to distance its policies from its neighbor and old ally Russia to stay on good terms with the rest of the world.

Understandably, the volume of trade with Russia took a nosedive in 2023, though Astana and Moscow continue to have a lukewarm relationship—at least for the sake of appearance.

At the same time, Kazakhstan has been more than eager to attract western businesses which have had to leave Russia due to sanctions. Over 400 such companies may decide to decamp to Kazakhstan in order to keep a presence in the region, which means that Russia’s loss will be Kazakhstan’s gain.

Foreign capital inflow

Decoupling from Moscow is particularly important for Astana not only to lure western businesses, but also to maintain the inflow of foreign investments in Kazakhstani businesses, which the country has been enjoying even before the war in Ukraine.

Kazakhstan is, by a large margin, the top recipient of international investments among all post-Soviet and Central Asian nations, mainly because of the country’s well-developed industrial infrastructure, political stability, and—perhaps most effective of all—tax exemptions granted to foreign investors.

The country has become increasingly popular with investors, attracting just under USD6 billion in foreign direct investment (FDI) in 2021. The net FDI inflow rose to USD6.1 billion in 2022, according to the UN Conference on Trade and Development (UNCTAD). The 2023 figures, which will be released some time in 2024, will likely mark another increase.

Energy sector going strong

Despite the inflow of FDI and the rise of new economic sectors, Kazakhstan continues to rely on its energy exports. The country has been exporting approximately USD21.5 billion worth of crude petroleum per year, according to The Observatory of Economic Complexity (OEC), citing 2021 data.

With crude oil prices climbing to just under USD90 per barrel in September, 2023, up from just USD65 in March, and then again dropping to under USD70 in December, 2023, the energy sector has seen significant price fluctuations.

However, “the price of a barrel of oil is likely to trade between USD70 and USD100 for most of 2024,” in the estimation of the Investment Strategy Group (ISG) at Goldman Sachs, meaning that the hydrocarbons market in 2024 will fare at least as well as it did in 2023.

Kazakhstan is looking into opportunities for cooperation with the EU in the coming months to end its longtime reliance on Russian infrastructure for crude exports. “The country’s major oil transporter KazTransOil revealed that the flow of Kazakh oil to European markets through Azerbaijan increased in April-June,” reported Caspian News in July, 2023,—a trend which continued throughout the year.

Kazakhstan will be working on more plans for the trans-Caspian shipment of oil to the Port of Baku and then to Europe via the Baku-Tbilisi-Ceyhan pipeline, aiming to deliver over 1.5 million tons of crude oil to Europe in 2024.

Central Asia’s tourism hub?

Astana knows very well that hydrocarbon exports cannot secure economic prosperity in the long run, and therefore Kazakhstan will strive to achieve more economic diversification this year. Tourism is the country’s best bet.

Among the most progressive jurisdictions in Central Asia with remarkable personal freedoms, Kazakhstan is keen to increase the number of tourist arrivals.

What international observers have to say is not disappointing at all. “We have a positive outlook for Kazakhstan’s tourism sector in 2024 as we project an increase in arrivals from the 2023 level,” noted the business intelligence firm, Fitch Solutions, adding that “we expect 2024 to mark a full recovery above the pre-pandemic level in 2019.”

Although the tourism sector will not be able to match the USD20 billion generated by oil and gas exports any time soon, investing in tourism will be a step in the right direction—and one that will do no harm to Kazakhstan’s brand image globally.

You may also be interested in...

Diplomacy

Moving Capitals

Kazakhstan/Nigeria/Indonesia/Egypt

View More

Economy

Kazakhstan & Uzbekistan: Reform?

Economic Policy Changes in Central Asia

View More

Energy & Mining

Steppe on It

Kazakhstan's Renewable Woes

View More

Diplomacy

Nazarbayev Steps Down

Kazakhstan's Changing Political Scene

View More
Astana,/,Astana,Kazakhstan

Economy

What the world wants

Kazakhstan's bold plans

View More
Astana:  The Next 20 Years

Real Estate & Construction

Astana: The Next 20 Years

Smart City

View More
Off Script

Health & Education

Off Script

Adopting Latin Script

View More
Know This

Health & Education

Know This

View More
Prescription:  Localization

Health & Education

Prescription: Localization

Pharmaceuticals

View More
Take Care

Health & Education

Take Care

Health

View More
View All Articles