ASTANA, December 12, 2024 – A new World Bank report highlights Kazakhstan’s progress in reducing poverty and the challenges ahead for inclusive growth, stressing that the pace of poverty reduction has slowed in recent years despite significant advances since the early 2000s. According to the “Kazakhstan Poverty and Equity Assessment 2024” report, making fiscal policy more pro-poor, improving the quality of education, and strengthening climate resilience are critical priorities for policymakers in order to reduce poverty and inequality in Kazakhstan.
Kazakhstan’s economy has grown robustly since 2006, with an average annual growth rate of 4.7 percent. This growth has increased incomes and living standards, transitioning the country to upper-middle-income status. These gains lifted 5.9 million people out of poverty, reducing the poverty rate from 49.5 percent to 8.5 percent in the same period.
“Between 2006 and 2021, economic advancement significantly improved living standards and reduced poverty rates in Kazakhstan. Economic growth has slowed since 2014, and the pace of poverty reduction has fallen. The COVID-19 pandemic exacerbated these challenges, highlighting the need for resilient and inclusive economic strategies presented in this report,” said Andrei Mikhnev, World Bank Country Manager for Kazakhstan.
Consumption growth has been the main driver of poverty reduction, supported by higher labor incomes. However, the report identifies three phases in Kazakhstan’s poverty reduction journey. Rapid poverty decline from 2006 to 2013 was partially reversed by the 2014–2016 economic downturn, which raised poverty rates. From 2016 to 2021, poverty reduction resumed, but at a slower pace than during the first phase.
Since 2006, the middle class, defined as households with a low probability of falling into poverty, has increased 2.5-fold to reach 67 percent of the population in 2021, up from 26 percent in 2006. However, the expansion of the middle class has stagnated since 2013, as structural transformation and productivity growth have slowed. The report re-emphasizes the need to diversify Kazakhstan’s economy, which remains heavily reliant on commodity exports.
Despite nationwide progress, significant disparities persist. Poverty rates in rural areas (11.4 percent) remain higher than in urban centers (6.6 percent), and the Turkistan region now accounts for a disproportionate share of the poor population. Moreover, poverty has become more concentrated among children and large families, with children now comprising 40 percent of the poor, up from 27 percent in 2006.
The report also highlights trends in income inequality. While the Gini index* remains relatively low compared to other upper-middle-income countries, it rose from 24.3 in 2015 to 26.4 in2021, driven by faster income growth among high-income households. Fiscal policies, including taxes and social spending, have helped reduce inequality and poverty but could be more effective if the equity perspective is enhanced and becomes more pro-poor.
Investing in human capital is crucial for long-term growth and poverty reduction. Although access to education is universal, disparities in quality and outcomes remain significant. The Human Capital Index suggests that children in Kazakhstan achieve only 53–64 percent of their productivity potential, with socio-economic and regional disparities further exacerbating inequalities.
Additionally, climate-related shocks pose growing risks, particularly for rural and vulnerable populations. While Kazakhstan’s exposure to climate risks is relatively low compared to its neighbors, its vulnerability is higher due to weak adaptive capacities.
To sustain progress and address these challenges, the report recommends improving the redistributive performance of fiscal policies through progressive taxation and better-targeted social transfers. Enhancing the quality of education, particularly for disadvantaged groups, is critical for leveling the playing field and preparing Kazakhstan’s workforce for future opportunities. Finally, building resilience against climate shocks through infrastructure investments and targeted transfers to low-income households will be essential for protecting the country’s most vulnerable populations.
Kazakhstan’s journey from poverty reduction to inclusive growth demonstrates significant achievements but also highlights the importance of targeted policies to address persistent disparities. With focused reforms, the country can ensure sustainable and equitable development for all.
*The Gini index measures inequality on a scale from 0 to 100. Higher values indicate higher inequality.
