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 6.5% in 2025, driven by strong domestic demand and a one-off surge in oil output from the Tengiz oilfield expansion, Kazakhstan's economic growth moderated to 4.1% year-on-year in H1 2026, largely due to an 8% contraction in oil production from maintenance shutdowns and export route disruptions. Other sectors performed well, with manufacturing growing at 9%, construction at 15.2%, and investment rising 9.6%, supported by higher capital spending from state-owned enterprises and the private sector.

Labor market conditions remained broadly stable, with unemployment at 4.5% in Q1 2026, though real wages declined 2.3% year-on-year and real income growth was virtually flat, reflecting persistent inflationary pressures. Inflation eased to 9.8% in August 2026 from 12.3% in December 2025, but remains well above the National Bank of Kazakhstan’s 5% target, with food and non-food prices rising 9.5% and 11.4%, respectively.

The external position improved markedly, with the current account swinging to a surplus of 0.7% of GDP in H1 2026, as higher oil prices boosted export earnings by 27.4% year-on-year. Foreign reserves rose to $70.6 billion, covering nine months of imports. The fiscal deficit held steady at 2.2% of GDP, while public debt remained stable at 24.4% of GDP.

Looking ahead, growth is projected to moderate to 4.6% in 2026 before converging toward potential by 2028, as oil production stabilizes. Inflation is expected to remain above the National Bank of Kazakhstan's target through at least 2027, underscoring the need for closer fiscal-monetary coordination. The fiscal deficit is projected to average 3.0% of GDP in 2027–28, with public debt rising gradually to 29.5% of GDP. The poverty rate is expected to fall to 7.9% by 2028, though weak real income growth and elevated inflation pose risks, particularly for lower-income and informal workers. Downside risks include further oil export disruptions, global price volatility, and El Niño-related food price pressures.

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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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