Economy of Kazakhstan
Encyclopedia
The economy of Kazakhstan
is the largest economy in Central Asia
. It possesses enormous fossil fuel
reserves as well as minerals and metals. It also has considerable agricultural potential with its vast steppe
lands accommodating both livestock and grain production, as well as developed space infrastructure, which took over all launches to the International Space Station
from the Space Shuttle
. The mountains in the south are important for apple
s and walnut
s; both species grow wild there. Kazakhstan's industrial sector rests on the extraction and processing of these natural resources and also on a relatively large machine building sector specializing in construction equipment, tractors, agricultural machinery, and some military items. The breakup of the USSR and the collapse of demand for Kazakhstan's traditional heavy industry products have resulted in a sharp contraction of the economy since 1991, with the steepest annual decline occurring in 1994. In 1995-97 the pace of the government program of economic reform and privatization quickened, resulting in a substantial shifting of assets into the private sector. The December 1996 signing of the Caspian Pipeline Consortium
agreement to build a new pipeline from western Kazakhstan's Tengiz Field
to the Black Sea
increases prospects for substantially larger oil exports in several years. Kazakhstan's economy turned downward in 1998 with a 2.5% decline in GDP growth due to slumping oil prices and the August financial crisis in Russia
. A bright spot in 1999 was the recovery of international petroleum
prices, which, combined with a well-timed tenge devaluation and a bumper grain harvest, pulled the economy out of recession.
Current GDP per capita shrank by 26% in the Nineties. However since 2000, Kazakhstan's economy grew sharply, aided by increased prices on world markets for Kazakhstan's leading exports—oil, metals and grain. GDP grew 9.6% in 2000, up from 1.7% in 1999. Since 2001, GDP growth has been among the highest in the world. In 2006, extremely high GDP growth had been sustained, and grew by 10.6%. Business with booming Russia and China, as well as neighboring Commonwealth of Independent States
(CIS) nations have helped to propel this amazing growth. The increased economic growth also led to a turn-around in government finances, with the budget moving from a cash deficit of 3.7% of GDP in 1999 to 0.1% surplus in 2000.
For purchasing power parity comparisons, the US Dollar is exchanged at 59.95 Tenges only. Mean wages were $6.93 per manhour in 2009.
Kazakhstan's monetary policy has been well-managed. Its principal challenges in 2001 are to manage strong foreign currency inflows without sparking inflation. Inflation
has, in fact, stayed under control, registering 9.8% in 2000, and appears likely to be under 10% in 2001. Because of its strong economic performance and financial health, Kazakhstan became the first former Soviet republic to repay all of its debt to the IMF by paying back $400 million in 2000; 7 years ahead of schedule. Overall foreign debt is about $12.5 billion, $4 billion of which is owed by the government. This amounts to 69% of GDP, well within manageable levels.
The upturn in economic growth, combined with the results of earlier tax and financial sector reforms, dramatically improved government finances from the 1998 budget deficit level of 4.2% of GDP to a slight surplus in 2000. Government tax revenues grew from 16.4% of GDP in 1999 to 20.6% of GDP in 2000. In 2000, Kazakhstan adopted a new Tax Code in an effort to consolidate these gains. Its strong financial position also allowed the government to reduce the value-added tax (VAT) from 20% to 16% and reduce social (payroll) taxes as of July 2001. Kazakhstan's stronger budget position and strong export earnings earned it credit ratings upgrades from Moody's
, S&P
, and Fitch
during 2001.
Kazakhstan instituted a pension reform program in 1998 that was partly based on the model of the Chilean pension system
but enclosed modifications. By July 2001, Kazakhstanis had contributed more than $1 billion to their own personal pension accounts, most of which is managed by the private sector. The National Bank
oversees and regulates the pension fund
s. The pension funds' growing demand for quality investment outlets triggered rapid development of the debt securities market. Pension fund capital is being invested almost exclusively in corporate and government bonds, including Government of Kazakhstan Eurobonds. The Kazakhstani banking system is developing rapidly. Banking systems capitalization now exceeds $1 billion. The National Bank has introduced deposit insurance in its campaign to strengthen the banking sector. Several major foreign banks have branches in Kazakhstan, including ABN AMRO
, Citibank
, and HSBC
. Kazakhstan is also a member of the Economic Cooperation Organization
(ECO).
According to data Republic of Kazakhstan Agency for Statistics in January–March 2010, production of GDP amounted to 3,881.6 billion tenge and an increase of 7,1%.
Kazakhstan has the potential to be a world-class oil exporter in the medium term. The landmark foreign investment in Kazakhstan is the TengizChevroil
joint venture, owned 50% by ChevronTexaco, 25% by ExxonMobil
, 20% by the Government of Kazakhstan, and 5% by Lukarco
of Russia. The Karachaganak natural gas and gas condensate field
is being developed by BG
, Agip
, ChevronTexaco, and Lukoil
. The Agip
-led Offshore Kazakhstan Consortium has discovered potentially huge Kashagan oil field
in the northern Caspian. Kazakhstan's economic future is linked to oil and gas development. GDP growth will depend on the price of oil, as well as the ability to develop new deposits.
Kazakhstan is the third country in the world for uranium production volumes, and it owns the world second biggest uranium reserves after Australia
.
It has also the largest silver, zinc and nickel markets in West Asia.
Sherin Suzhikova, Counselor of Kazakhstan's Chamber of Commerce and Industry and Chao yon-chuan, Secretary-General of the Taiwan External Trade Development Council, signed an agreement on 13 October 2006 in Taipei
to improve economic relations through "exchanges of market information and visits by trade professionals." TAITRA has an office in Almaty
, Kazakhstan.
In 2006, North Dakota
n Lieutenant Governor Jack Dalrymple
led an 18-member delegation of the North Dakota Trade Office representing seven North Dakota companies and Dickinson State University on a trip to Kazakhstan, Ukraine
and Russia
. North Dakota exports mostly machinery to Kazakhstan, the eighth largest destination for North Dakotan exports; machinery exports increased from $22,000 to $25 million between 2000 and 2005.
Kazakhstan
Kazakhstan , officially the Republic of Kazakhstan, is a transcontinental country in Central Asia and Eastern Europe. Ranked as the ninth largest country in the world, it is also the world's largest landlocked country; its territory of is greater than Western Europe...
is the largest economy in Central Asia
Central Asia
Central Asia is a core region of the Asian continent from the Caspian Sea in the west, China in the east, Afghanistan in the south, and Russia in the north...
. It possesses enormous fossil fuel
Fossil fuel
Fossil fuels are fuels formed by natural processes such as anaerobic decomposition of buried dead organisms. The age of the organisms and their resulting fossil fuels is typically millions of years, and sometimes exceeds 650 million years...
reserves as well as minerals and metals. It also has considerable agricultural potential with its vast steppe
Steppe
In physical geography, steppe is an ecoregion, in the montane grasslands and shrublands and temperate grasslands, savannas, and shrublands biomes, characterized by grassland plains without trees apart from those near rivers and lakes...
lands accommodating both livestock and grain production, as well as developed space infrastructure, which took over all launches to the International Space Station
International Space Station
The International Space Station is a habitable, artificial satellite in low Earth orbit. The ISS follows the Salyut, Almaz, Cosmos, Skylab, and Mir space stations, as the 11th space station launched, not including the Genesis I and II prototypes...
from the Space Shuttle
Space Shuttle
The Space Shuttle was a manned orbital rocket and spacecraft system operated by NASA on 135 missions from 1981 to 2011. The system combined rocket launch, orbital spacecraft, and re-entry spaceplane with modular add-ons...
. The mountains in the south are important for apple
Apple
The apple is the pomaceous fruit of the apple tree, species Malus domestica in the rose family . It is one of the most widely cultivated tree fruits, and the most widely known of the many members of genus Malus that are used by humans. Apple grow on small, deciduous trees that blossom in the spring...
s and walnut
Walnut
Juglans is a plant genus of the family Juglandaceae, the seeds of which are known as walnuts. They are deciduous trees, 10–40 meters tall , with pinnate leaves 200–900 millimetres long , with 5–25 leaflets; the shoots have chambered pith, a character shared with the wingnuts , but not the hickories...
s; both species grow wild there. Kazakhstan's industrial sector rests on the extraction and processing of these natural resources and also on a relatively large machine building sector specializing in construction equipment, tractors, agricultural machinery, and some military items. The breakup of the USSR and the collapse of demand for Kazakhstan's traditional heavy industry products have resulted in a sharp contraction of the economy since 1991, with the steepest annual decline occurring in 1994. In 1995-97 the pace of the government program of economic reform and privatization quickened, resulting in a substantial shifting of assets into the private sector. The December 1996 signing of the Caspian Pipeline Consortium
Caspian Pipeline Consortium
The Caspian Pipeline Consortium is a consortium and a pipeline to transport Caspian oil from Tengiz field to the Novorossiysk-2 Marine Terminal on Russia's Black Sea coast. It is also a major export route for oil from the Kashagan and Karachaganak fields...
agreement to build a new pipeline from western Kazakhstan's Tengiz Field
Tengiz Field
Tengiz field is an oil and gas field located in northwestern Kazakhstan's low-lying wetlands along the northeast shores of the Caspian Sea...
to the Black Sea
Black Sea
The Black Sea is bounded by Europe, Anatolia and the Caucasus and is ultimately connected to the Atlantic Ocean via the Mediterranean and the Aegean seas and various straits. The Bosphorus strait connects it to the Sea of Marmara, and the strait of the Dardanelles connects that sea to the Aegean...
increases prospects for substantially larger oil exports in several years. Kazakhstan's economy turned downward in 1998 with a 2.5% decline in GDP growth due to slumping oil prices and the August financial crisis in Russia
Russia
Russia or , officially known as both Russia and the Russian Federation , is a country in northern Eurasia. It is a federal semi-presidential republic, comprising 83 federal subjects...
. A bright spot in 1999 was the recovery of international petroleum
Petroleum
Petroleum or crude oil is a naturally occurring, flammable liquid consisting of a complex mixture of hydrocarbons of various molecular weights and other liquid organic compounds, that are found in geologic formations beneath the Earth's surface. Petroleum is recovered mostly through oil drilling...
prices, which, combined with a well-timed tenge devaluation and a bumper grain harvest, pulled the economy out of recession.
Current GDP per capita shrank by 26% in the Nineties. However since 2000, Kazakhstan's economy grew sharply, aided by increased prices on world markets for Kazakhstan's leading exports—oil, metals and grain. GDP grew 9.6% in 2000, up from 1.7% in 1999. Since 2001, GDP growth has been among the highest in the world. In 2006, extremely high GDP growth had been sustained, and grew by 10.6%. Business with booming Russia and China, as well as neighboring Commonwealth of Independent States
Commonwealth of Independent States
The Commonwealth of Independent States is a regional organization whose participating countries are former Soviet Republics, formed during the breakup of the Soviet Union....
(CIS) nations have helped to propel this amazing growth. The increased economic growth also led to a turn-around in government finances, with the budget moving from a cash deficit of 3.7% of GDP in 1999 to 0.1% surplus in 2000.
Macro-economic trend
This is a chart of trend of gross domestic product of Kazakhstan at market prices estimated by the International Monetary Fund with figures in millions of Kazakhstani Tenges.| Year | Gross Domestic Product | US Dollar Exchange | Inflation Index (2000=100) |
Per Capita Income (as % of USA) |
|---|---|---|---|---|
| 1995 | 78,014,200 | 61.11 Tenges | 64 | 3.81 |
| 2000 | 102,599,902 | 142.26 Tenges | 100 | 3.53 |
| 2005 | 147,453,000 | 132.88 Tenges | 140 | 9.01 |
For purchasing power parity comparisons, the US Dollar is exchanged at 59.95 Tenges only. Mean wages were $6.93 per manhour in 2009.
Kazakhstan's monetary policy has been well-managed. Its principal challenges in 2001 are to manage strong foreign currency inflows without sparking inflation. Inflation
Inflation
In economics, inflation is a rise in the general level of prices of goods and services in an economy over a period of time.When the general price level rises, each unit of currency buys fewer goods and services. Consequently, inflation also reflects an erosion in the purchasing power of money – a...
has, in fact, stayed under control, registering 9.8% in 2000, and appears likely to be under 10% in 2001. Because of its strong economic performance and financial health, Kazakhstan became the first former Soviet republic to repay all of its debt to the IMF by paying back $400 million in 2000; 7 years ahead of schedule. Overall foreign debt is about $12.5 billion, $4 billion of which is owed by the government. This amounts to 69% of GDP, well within manageable levels.
The upturn in economic growth, combined with the results of earlier tax and financial sector reforms, dramatically improved government finances from the 1998 budget deficit level of 4.2% of GDP to a slight surplus in 2000. Government tax revenues grew from 16.4% of GDP in 1999 to 20.6% of GDP in 2000. In 2000, Kazakhstan adopted a new Tax Code in an effort to consolidate these gains. Its strong financial position also allowed the government to reduce the value-added tax (VAT) from 20% to 16% and reduce social (payroll) taxes as of July 2001. Kazakhstan's stronger budget position and strong export earnings earned it credit ratings upgrades from Moody's
Moody's
Moody's Corporation is the holding company for Moody's Analytics and Moody's Investors Service, a credit rating agency which performs international financial research and analysis on commercial and government entities. The company also ranks the credit-worthiness of borrowers using a standardized...
, S&P
Standard & Poor's
Standard & Poor's is a United States-based financial services company. It is a division of The McGraw-Hill Companies that publishes financial research and analysis on stocks and bonds. It is well known for its stock-market indices, the US-based S&P 500, the Australian S&P/ASX 200, the Canadian...
, and Fitch
Fitch Ratings
The Fitch Group is a majority-owned subsidiary of FIMALAC, headquartered in Paris. Fitch Ratings, Fitch Solutions and Algorithmics, are part of the Fitch Group....
during 2001.
Kazakhstan instituted a pension reform program in 1998 that was partly based on the model of the Chilean pension system
Chile pension system
The Chile Pension system refers to old-age, disability and survivor pensions for workers in Chile. The pension system was changed by José Piñera, during Augusto Pinochets military government on November 4, 1980 from a PAYGO-system to a fully funded capitalization system run by private sector...
but enclosed modifications. By July 2001, Kazakhstanis had contributed more than $1 billion to their own personal pension accounts, most of which is managed by the private sector. The National Bank
National Bank of Kazakhstan
-History:The National Bank was formed on April 13, 1993 with the reorganisation of the of the Soviet era Kazakh Republican bank to become the central bank of Kazakhstan.-External links:...
oversees and regulates the pension fund
Pension fund
A pension fund is any plan, fund, or scheme which provides retirement income.Pension funds are important shareholders of listed and private companies. They are especially important to the stock market where large institutional investors dominate. The largest 300 pension funds collectively hold...
s. The pension funds' growing demand for quality investment outlets triggered rapid development of the debt securities market. Pension fund capital is being invested almost exclusively in corporate and government bonds, including Government of Kazakhstan Eurobonds. The Kazakhstani banking system is developing rapidly. Banking systems capitalization now exceeds $1 billion. The National Bank has introduced deposit insurance in its campaign to strengthen the banking sector. Several major foreign banks have branches in Kazakhstan, including ABN AMRO
ABN AMRO
ABN AMRO Bank N.V. is a Dutch state-owned bank with headquarters in Amsterdam. It was re-established, in its current form, in 2009 following the acquisition and break up of ABN AMRO Group by a banking consortium consisting of Royal Bank of Scotland Group, Santander and Fortis...
, Citibank
Citibank
Citibank, a major international bank, is the consumer banking arm of financial services giant Citigroup. Citibank was founded in 1812 as the City Bank of New York, later First National City Bank of New York...
, and HSBC
HSBC
HSBC Holdings plc is a global banking and financial services company headquartered in Canary Wharf, London, United Kingdom. it is the world's second-largest banking and financial services group and second-largest public company according to a composite measure by Forbes magazine...
. Kazakhstan is also a member of the Economic Cooperation Organization
Economic Cooperation Organization
The Economic Cooperation Organization is an intergovernmental organization involving seven Asian and three Eurasian nations, part of the South-central Asian Union. It provides a platform to discuss ways to improve development and promote trade, and investment opportunities. The ECO is an ad hoc...
(ECO).
According to data Republic of Kazakhstan Agency for Statistics in January–March 2010, production of GDP amounted to 3,881.6 billion tenge and an increase of 7,1%.
Mining
Oil and gas is the leading economic sector. In 2000, Kazakhstan produced 35,252,000 metric tons of oil (700,000 barrels per day), a 17.4% increase over 1999's 30,025,000 tons. It exported 28,883,000 tons of oil in 2000, up 38.8% from 20,813,000 tons in 1999. Production in 2001 has been growing at roughly 20%, on target to meet the government's forecast of 40,100,000 tons of oil (800,000 barrels per day). In 2000, production reached 11.5 km³ of natural gas, up from 8.2 km³ in 1999.Kazakhstan has the potential to be a world-class oil exporter in the medium term. The landmark foreign investment in Kazakhstan is the TengizChevroil
TengizChevroil
Tengizchevroil is a joint venture between Chevron , ExxonMobil , KazMunayGas and LukArco...
joint venture, owned 50% by ChevronTexaco, 25% by ExxonMobil
ExxonMobil
Exxon Mobil Corporation or ExxonMobil, is an American multinational oil and gas corporation. It is a direct descendant of John D. Rockefeller's Standard Oil company, and was formed on November 30, 1999, by the merger of Exxon and Mobil. Its headquarters are in Irving, Texas...
, 20% by the Government of Kazakhstan, and 5% by Lukarco
LukArco
LukArco B.V. is a subsidiary of the Russian oil company Lukoil. It was formed in February 1997 as a joint venture between Lukoil and the former American oil company ARCO....
of Russia. The Karachaganak natural gas and gas condensate field
Karachaganak Field
Karachaganak Field is a gas condensate field in Kazakhstan. It is located about 150 km east from the city of Oral in the northwest of Kazakhstan. The field was once a massive Permian and Carboniferous reef complex covering an area . At its largest point the reservoir contains a gas column ...
is being developed by BG
BG Group
BG Group plc is a global oil and gas company headquartered in Reading, United Kingdom. It has operations in 25 countries across Africa, Asia, Australasia, Europe, North America and South America and produces around 680,000 barrels of oil equivalent per day. It has a major Liquefied Natural Gas ...
, Agip
Agip
Agip is an Italian automotive gasoline and diesel retailer established in 1926. It is a subsidiary of the multinational petroleum company Eni.In 2003, Eni S.p.A...
, ChevronTexaco, and Lukoil
LUKoil
Lukoil/LUKoil ; ) is Russia's second largest oil company and its second largest producer of oil. In 2009, the company produced 97.615 million tons of oil; ....
. The Agip
Agip
Agip is an Italian automotive gasoline and diesel retailer established in 1926. It is a subsidiary of the multinational petroleum company Eni.In 2003, Eni S.p.A...
-led Offshore Kazakhstan Consortium has discovered potentially huge Kashagan oil field
Kashagan Field
Kashagan Field is an offshore oil field located in Kazakhstan. The field is situated in the northern part of the Caspian Sea close to the Kazakhstan city of Atyrau. The field was discovered in 2000 and was one of the larger discoveries in that decade, it is estimated that the Kashagan Field has...
in the northern Caspian. Kazakhstan's economic future is linked to oil and gas development. GDP growth will depend on the price of oil, as well as the ability to develop new deposits.
Kazakhstan is the third country in the world for uranium production volumes, and it owns the world second biggest uranium reserves after Australia
Australia
Australia , officially the Commonwealth of Australia, is a country in the Southern Hemisphere comprising the mainland of the Australian continent, the island of Tasmania, and numerous smaller islands in the Indian and Pacific Oceans. It is the world's sixth-largest country by total area...
.
It has also the largest silver, zinc and nickel markets in West Asia.
Trade
Taipei
Taipei City is the capital of the Republic of China and the central city of the largest metropolitan area of Taiwan. Situated at the northern tip of the island, Taipei is located on the Tamsui River, and is about 25 km southwest of Keelung, its port on the Pacific Ocean...
to improve economic relations through "exchanges of market information and visits by trade professionals." TAITRA has an office in Almaty
Almaty
Almaty , also known by its former names Verny and Alma-Ata , is the former capital of Kazakhstan and the nation's largest city, with a population of 1,348,500...
, Kazakhstan.
In 2006, North Dakota
North Dakota
North Dakota is a state located in the Midwestern region of the United States of America, along the Canadian border. The state is bordered by Canada to the north, Minnesota to the east, South Dakota to the south and Montana to the west. North Dakota is the 19th-largest state by area in the U.S....
n Lieutenant Governor Jack Dalrymple
Jack Dalrymple
John "Jack" Dalrymple is a North Dakota politician and businessman who is the current Governor of North Dakota, and a one-time candidate for the U.S. Senate in 1992. Dalrymple became governor after the resignation of John Hoeven, who was elected to the U.S...
led an 18-member delegation of the North Dakota Trade Office representing seven North Dakota companies and Dickinson State University on a trip to Kazakhstan, Ukraine
Ukraine
Ukraine is a country in Eastern Europe. It has an area of 603,628 km², making it the second largest contiguous country on the European continent, after Russia...
and Russia
Russia
Russia or , officially known as both Russia and the Russian Federation , is a country in northern Eurasia. It is a federal semi-presidential republic, comprising 83 federal subjects...
. North Dakota exports mostly machinery to Kazakhstan, the eighth largest destination for North Dakotan exports; machinery exports increased from $22,000 to $25 million between 2000 and 2005.
See also
- Aslan MusinAslan MusinAslan Mussin is the former Speaker of Majilis of the Parliament of Kazakhstan. He has served as the Deputy Prime Minister of Kazakhstan since 10 January 2007. He previously served as Minister of Economy and Budget Planning of Kazakhstan from 4 October 2006 to 9 January 2007. Prior to that he...
, Minister of Economy and Budget Planning - Vladimir ShkolnikVladimir ShkolnikVladimir Sergeyevich Shkolnik , born 17 February 1949 in Serpukhov, Russia, served as the Minister of Industry and Trade in the Government of Kazakhstan until Galym Orazbakov replaced him on 10 January 2007 in a political shakeup...
, Minister of Industry and Trade - Baktykozha Izmukhambetov, Minister of Energy and Mineral Resources
- Akhmetzhan YesimovAkhmetzhan YesimovAkhmetzhan Yessimov is the former Minister of Agriculture in the Government of Kazakhstan and current mayor of Almaty.-OSCE and ENP campaign:...
, Minister of Agriculture
External links
- U.S. Department of Energy Country Analysis Brief
- Kazakhstan Plans to Build Highway Connecting China and Europe
- Kazakh central bank misspells 'bank' on money
- International Business; China Pays Dearly for Kazakhstan Oil
- Kazakh President's Daughter Chides Steel Baron Mittal
- Commercial gold and copper discoveries in Kazakhstan
- Kazakhstan Changes Energy Strategy on the Way to WTO
- Kazakhstan to be top oil producer by 2011: Nazarbayev
- Business and Economics in Kazakhstan