Kazakhstan’s Economy Needs Urgent Reforms, Experts Warn

According to recent IMF and World Bank reports Kazakhstan’s economy requires structural changes to maintain sustainable growth.

Analysts from Halyk Finance reviewed their findings and provided their own insights, Orda.kz reports.

The IMF and World Bank assessed Kazakhstan’s economic growth in 2024 positively, highlighting the effectiveness of monetary policy and the banking sector's stability.

However, they also warned of risks that could slow progress.

IMF experts who visited Kazakhstan last year predict that the country’s GDP could grow by 5% in 2025.

This growth could slow to 3-3.5% in the long run without necessary reforms. The World Bank shares a similar outlook, forecasting 4.7% growth in 2025, followed by a decline to 3-3.5%.

Halyk Finance analysts caution that Kazakhstan’s current economic boost is not sustainable.

The sharp rise in trade, a key driver of growth, is largely fueled by government spending, which increased by 13.3%, while imports, investments, and real incomes declined.

Despite these concerns, Halyk Finance remains optimistic.

Our forecast for economic growth in 2025 is more optimistic than the IMF and the World Bank and is 5.3%. According to our estimates, a significant increase in oil production from 87 million tons in 2024 to 96-99 million tons in 2025 will provide significant support for growth, writes Halyk Finance analyst Saltanat Igenbekova.

As for inflation, neither foreign nor Kazakhstani experts expect it to decrease to 5% anytime soon.

The IMF forecasts that inflation will only reach 5% by 2028. The World Bank expects 7.5-8% inflation in 2025 and 6% in 2026.

There are still doubts about whether the five percent target will be achieved. The unstable tenge exchange rate and other factors are hindering it.

Halyk Finance is even less optimistic:

Internal risks, such as weak budget discipline, high transfers from the National Fund, tenge exchange rate volatility, as well as external risks, may pressure price stability. We have revised our inflation forecast upwards to 9% due to the recent decision to liberalize fuel prices, further growth in utility tariffs, uncertainty about oil prices, and, accordingly, the exchange rate. says Saltanat Igenbekova.

Meanwhile, banks are not actively lending to businesses, while many loans are issued to individuals.

Protectionism, through which the authorities try to maintain social stability, is ineffective.

Instead of such measures, analysts believe it is better to develop special targeted assistance for low-income citizens and develop the social insurance sector.

Despite talks of economic liberalization, state intervention has been increasing, making reforms more urgent than ever. The need for change is ripe - oil prices are falling, and the prospects for Kazakhstan's main trading partners are not entirely rosy. Therefore, it is time to reduce state participation in the economy and improve monetary, fiscal, and social policies.

However, according to Halyk Finance analyst Saltanat Igenbekova, progress has been slow:

Measures to reduce the state's role, improve the business environment, and increase domestic competition, outlined in the presidential decree on economic liberalization, are being implemented slowly and are not receiving enough attention from government agencies.

Original Author: Nikita Drobny