Kazakhstan

Kazakhstan, the world's largest landlocked country, boasts the ninth largest territory globally and a population of just over 20 million, resulting in one of the lowest population densities at 7.4 people per square kilometer. It shares borders with Russia, China, and other Central Asian economies and is a crucial part of the Middle Corridor, linking Chinese and European markets via Central Asia and the South Caucasus.

The first wave of market transition reforms in the 1990s, combined with new investment in the oil and gas sector, propelled Kazakhstan into upper-middle-income status. Yet the transition to a fully market-based economy remains incomplete, and the country continues to grapple with heavy dependence on non-renewable natural resources—oil, gas, uranium, coal, and gold. This reliance on extractive industries has constrained economic diversification and weighed on productivity, which remains low and largely stagnant.

Kazakhstan has set an ambitious target to double the size of its economy by 2030 from 2023 levels. Achieving this will require reducing state intervention, fostering competition, investing in infrastructure and human capital, and advancing decarbonization. Complementary efforts to upgrade infrastructure, improve human capital, and attract private financing will be equally critical to broadening the base of economic growth and enhancing long-term competitiveness.

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After expanding by 5.0% in 2024, Kazakhstan's economy recorded robust growth of 6.5% in 2025, driven by strong domestic demand and a one-off increase in oil output. Retail trade grew 7.5%, sustained largely by household borrowing, while the mining sector emerged as the main engine of growth following a 13.5% increase in oil production from the expansion of the Tengiz oilfield. Manufacturing and services expanded by 6.4% and 5.5%, respectively.

Unemployment held steady at 4.6% through Q4 2025. While formal employment grew 1.0% year-on-year, real wages fell 2% in Q3 due to rising inflation.

Inflation accelerated sharply to 12.3% in December 2025, up from 8.6% in 2024, driven by higher import costs, increased quasi-fiscal operations, and utility tariff hikes. With the economy operating above its potential, the National Bank of Kazakhstan (NBK) raised its policy rate to 18% by end-2025.

The current account deficit widened to 3.9% of GDP in 2025, from 2.7% in 2024, reflecting a weaker trade balance and FDI-linked profit repatriation. Gross foreign exchange reserves rose to $65.4 billion, covering nine months of imports. The fiscal deficit improved marginally to 3.2% of GDP, while government debt edged up to 24.8% of GDP.

Looking ahead, growth is projected to moderate to 4.6% in 2026 as oil production stabilizes, gradually converging toward its potential of around 3.5% by 2028. Household consumption is expected to remain resilient, supported by a recovery in real wages and targeted social transfers. Higher oil prices are projected to narrow the current account deficit to 0.4% of GDP in 2026, and the fiscal deficit to 1.3%, before stabilizing at an average of 2.8% in 2027–28. Public debt is projected to rise gradually to 29.1% of GDP by 2028.

Inflation is expected to subside only gradually, remaining above the NBK's 5% target through 2028. Continued quasi-fiscal interventions and import price pressures could sustain inflationary pressures over the medium term.

The poverty rate is projected to fall to 8.1% by 2027 (at the $8.30/day line), though elevated inflation and rising debt among low-income households pose risks to further reductions. Risks to the outlook are tilted to the downside—persistent inflation driven by global food prices and quasi-fiscal expansion could erode real incomes, particularly for poor and vulnerable households.

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Kazakhstan joined the World Bank in 1992, IFC and MIGA in 1993, and ICSID in 2000. Since then, the World Bank has provided more than 50 loans to the country, worth over $8 billion, while IFC’s cumulative investments exceeded $2.5 billion across more than 60 projects.

The results of these projects have included the restoration of the Northern Aral Sea; the two-fold increase of the volume of water, preservation of forests, modernization of the country's energy supply system and roads; and landmark projects like the structuring and tendering of the BAKAD PPP project and financing for Almaty Airport’s new passenger terminal.

Significant strides have also been made in professional and technical education, healthcare modernization, and technology commercialization. Complementing these efforts, the World Bank Group has provided targeted support to micro-, small-, and medium-sized enterprises (MSMEs)—including women entrepreneurs and rural agribusinesses—through local financial institutions, fostering inclusive growth and economic resilience.

The World Bank Group is also supporting Kazakhstan’s decarbonization initiatives to achieve carbon neutrality by 2060 and meet its Global Methane Pledge commitments.

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The Country Partnership Framework (CPF) for Kazakhstan for fiscal years 2026–2031 prioritizes three interrelated outcomes: (1) a better-connected Kazakhstan with improved infrastructure services, (2) a more resilient Kazakhstan with stronger natural resources management, and (3) a business-ready Kazakhstan with an improved environment for a more productive and innovative private sector. It also emphasizes a cross-cutting outcome — increased private sector participation in the economy — which underpins all three.

On the advisory side, Kazakhstan has been a pioneer in the World Bank's Reimbursable Advisory Services model. The flagship instrument is the Joint Economic Research Program (JERP) — one of the longest-running programs of its kind in the Europe and Central Asia region since its establishment in 2003. The JERP governed by a Framework Technical Cooperation Agreement through June 2028 and jointly coordinated by ASPIR and the Ministry of National Economy. Beyond the JERP, the World Bank also provides targeted advisory services to individual institutions, including a 2025 agreement with the National Bank of Kazakhstan focused on strengthening the mandatory accumulative pension system.

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