Kazakhstan is the richest and most successful central-Asian economy. Possessing vast natural resources and territories, Kazakhstan has managed to survive the first years of its independence from the Soviet Union without losing its capacity for continuous economic growth. At present, the country enjoys relative economic stability and faces good economic growth prospects. Its economy is open to new trade relationships, and its politics favors the development of new global economic ties. The global crisis of 2008-2009 did not cause any major difficulties in Kazakhstan, mainly because the country pursues the line of effective structural reforms while the global demand for its natural resources keeps growing. However, that Kazakhstan is so successful and rich does not mean that it is fully secured from various macroeconomic challenges. Recently, the countries of the CIS block have become particularly vulnerable to the negative impacts of global economic shocks. Kazakhstan's trade surplus is shrinking, and its budget deficit is growing. Consequently, the government will have to be particularly cautious with the policy decisions affecting the country's economic wellbeing in 2013-2014.
Gross Domestic Product
Since the beginning of the 21st century, Kazakhstan has displayed steady rates of GDP growth. As of 2012, the country's GDP was $231.3 billion (CIA). Compared to its GDP in 2011 ($220.3 billion), the country has improved its economic results by almost 5 percent. However, 2013 is not an easy year for Kazakhstan because in the first quarter of this year, the rates of GDP growth have slowed down to 4.6 percent, compared to 5.6 percent in the first quarter of 2012 (Reuters, "Kazakh GDP"). In 2011, the national economy expanded by an unprecedented 7.5 percent, while 2012 was marked with a 5-percent increase (Reuters, "Kazakh GDP"). National statistics agencies predict that in 2013, GDP will grow by approximately 6.0 percent (Reuters, "Kazakh GDP").
GDP per Capita
As the nation's domestic product is growing, so is its GDP per capita. At present, Kazakhstan earns $13,900 for each of its citizens, annually (CIA). The decline in GDP per capita, which Kazakhstan experienced in 2009, was a direct reflection of the global economic tensions. Still, even now, the rates of growth are not that promising. According to Trading Economics, in 2004, the Kazakhs earned on average $1,671 per year, compared to $2,629 in 2012. The average GDP has increased by approximately 63%. It is a complex result of numerous policies, reforms, and laws and regulations passed by the government with the goal of improving the country's macroeconomic climate. The nation's GDP is projected to increase in 2013, as well as the rates of GDP per capita. However, the exact numbers are difficult to estimate, due to the numerous factors that influence the quality of macroeconomic performance in Kazakhstan.
Recent Economic Growth
As mentioned earlier, the country's GDP continues to increase, being an essential indicator of the national economy's growth. Recently, Kazakhstan has entered a new phase of economic prosperity and continuous improvement. Although the patterns of economic growth have been uneven, it is clear that the government has been wise enough managing the nation's economic and human resources. Kaushik writes that Kazakhstan is rich in economic resources, which create a solid foundation for pursuing long-term growth. In Kazakhstan, 99 elements out of the 110 currently included in the Periodic Table have been discovered (Kaushik). Kazakhstan is the land to more than 15% of the world's uranium resources (Kaushik). Since 2009, the country has become the largest producer of uranium, leaving Australia and Canada behind (Kaushik). Another factor of the country's recent economic growth is that it favors the use of nuclear resources for peaceful purposes (Kaushik). In the meantime, Kazakhstan is making huge investments in the development of renewable energy sources, which are likely to become a strong basis for the creation of "green" economy (Kaushik). The current state of the national economy is threatened by its excessive reliance on a single commodity, and new government policies are being implemented to diversity the sources of economic profits for the nation (Kaushik).
In 2013, the country's economic growth slowed down under the influence of multiple factors, one of them being the global macroeconomic uncertainty. However, this decline in economic growth was not as dramatic as in other countries of the CIS, mainly due to the abundance of natural resources in Kazakhstan, the world's overdependence on oil and gas, and the growing exports of uranium. The nation's central bank expects the rates of economic growth to reach 5-6 percent in 2013 (Reuters). The total factor productivity is predicted to guide future improvements in the Kazakh economy (Amin and Ainekova 54). "The estimates of steady state growth rate are found to be around three per cent, implying that the growth rate of the economy may continue to be high before tapering down to around three (3) percent" (Amin and Ainekova 54).
Government Budget Deficit
According to the Central Intelligence Agency, the Kazakh budget revenues in 2012 were $43.08 billion, compared to $48.04 billion in expenses. Therefore, the current budget deficit accounts for 2.4% of the country's GDP (CIA). National policies and government decisions play a big role in how the country is coping with its budget problems. Chairman of the National Bank G. Marchenko predicts that the country's budget deficit will reach $19.6 billion by 2023 (IRBIS). This will happen if the government does not pass a new law to change the retirement age for women (IRBIS). Members of the baby boom generation, who were born at the end of the 1940s and the beginning of the 1950s, make up the greatest number of potential retirees (IRBIS). These retirement expenses weaken the state budget and make it difficult to balance the country's social needs with its revenues.
The amount of government debt needs to be considered in terms of both public and external debt obligations. At the end of 2012, Kazakhstan had more than $5.5 billion in external debt (BNews, "Kazakhstan's External Debt"). Coupled with inter-company debt, the country's external debt amounted to a total of $137 billion (BNews, "Kazakhstan's External Debt"). The non-banking sector owed approximately $118 billion to external parties (BNews, "Kazakhstan's External Debt"). 66.5 billion dollars had to be paid as part of the inter-company debt (BNews, "Kazakhstan's External Debt"). However, in 2012, Kazakhstan managed to reduce its external liabilities by $2.2 billion (BNews, "Kazakhstan's External Debt"). The amount of cash increased by almost 12%, and money supply grew by almost 8% (BNews, "Kazakhstan's External Debt"). Unfortunately, those trends were not sustained in the first quarter of 2013, when money supplies contracted by 5.8% (BNews, "Kazakhstan's External Debt"). Overall, the first quarter of 2013 looks much less favorable in macroeconomic terms, compared with the first quarter of 2012. The public debt accounts for 12% of GDP ranking Kazakhstan the 140th in the list of countries with the highest external debt (CIA).
As of July 2013, 1,736,896 people live in Kazakhstan (CIA). 63.1% of them are of Kazakh origin, with 23.7% represented by Russians (CIA). Minorities include the Uzbeks, Ukrainians, Tatars, Uighurs, Germans, and other nationalities (CIA). 64.4% of the national population speaks Kazakh, which is accepted as the state language (CIA). Russian is the official language of everyday business, and 95% of Kazakhs use it in their daily communications (CIA). 42.6% of the national population is comprised by individuals aged between 25 and 54 years (CIA). The median age is 29.5 years, which makes Kazakhstan a relatively young nation (CIA). The rates of population growth are projected at 1.3% in 2013 (CIA). Kazakhstan has only 8.43 deaths per 1,000 population, compared to 20.03 births (CIA). All other conditions being unchanged, life expectancy in 2013 is likely to reach 64 years for men and almost 75 years for women (CIA). These population projects look even stronger against the broad social policies implemented for Kazakhs by the national government, as well as the relatively low rates of unemployment compared to other CIS countries and the rest of the world.
CIA suggests that the levels of unemployment among Kazakh youth do not exceed 4.6%. In 2012, 474,800 people in Kazakhstan were officially unemployed (Asianet). Certainly, these figures do not account the number of those, who do not have official employment and are not registered in the state's welfare agencies. 39.7% of the unemployed in 2012 were men (Asianet). 3.9% of the young people aged between 16 and 24 years were also officially unemployed (Asianet). Meanwhile, the number of officially employed grew by 205,500 against 2011 (Asianet). Whether this growth was due to the creation of new jobs or simple legalization of the already working people remains unclear. However, the government is committed to the goal of creating additional 500 thousand jobs by 2020 (International Labor Organization). This policy is intended to keep the rates of unemployment under 5% (ILO). The most problematic is the situation with women as nearly 300 thousand of them remain unemployed. Consequently, future policies should be directed at providing women with additional employment opportunities.
In 2012, the rates of inflation in Kazakhstan did not exceed 6% (BNews, "Kazakhstan Inflation"). "The prices of foodstuff for last year increased by 5.3%, nonfood – for 3.5%, paid services – for 9.3%. In December this year inflation was at the level of 0.6%" (BNews, "Kazakhstan Inflation"). In December 2012, eggs became more expensive by 3.5%; vegetables and fruits – by 2.1%, and dairy products – by 0.8% (BNews, "Kazakhstan Inflation"). At the same time, the price of sugar and grain buckwheat fell by 1.1% and 0.9%, accordingly (BNews, "Kazakhstan Inflation"). Inflation rate forecasts for Kazakhstan are not very promising, however, economists expect that it will exceed the 6 percent made in 2012 (Reuters, "Kazakhstan's Inflation"). The rates of inflation in February 2013 fell to 0.8 percent against 0.9 percent in January but still remained at 6.8 percent for the first two months of 2013 (Reuters, "Kazakhstan's Inflation"). These changes in annual inflation are mostly due to the growth of incomes and bank credits (Reuters, "Kazakhstan's Inflation"). Despite these projections, the Central Bank cuts its refinancing and borrowing rates to a historically low 5.5 percent in August, 2012 (Reuters, "Kazakhstan's Inflation").
The total amount of exports from Kazakhstan in 2012 was $88.61 billion (CIA). The main export commodities include oil, oil products, gas, uranium, ferrous materials, chemicals, coal, machinery, grain and wool, as well as meat (CIA). The chief export partners are Italy, Netherlands, China, Russia, and Austria. China imports more than 95% of its uranium resources from Kazakhstan (Basov). As a result, Kazakhstan is pushing the development of the global nuclear energy sector.
Total imports to Kazakhstan in 2012 made up $42.82 billion (CIA). Kazakhstan is the 58th country in the world by the level of imports (CIA). The country imports equipment and machinery, foodstuffs, and metal products (CIA). Its imports partners are China, Russia, Ukraine, the United States, and Germany. At the beginning of 2013, imports to Kazakhstan continued to grow, reaching $4,203 billion in April against only $3,549 billion in March. Nonetheless, despite positive account balance and foreign trade surplus, the country must constantly monitor the amount of exports and imports to avoid the risks of trade deficit.
Exchange rates against the U.S. Dollar are relatively stable. In 2012, one U.S. Dollar cost on average 149.11 Kazakh Tenge, compared to KZT 146.62 in 2011 and KZT 147.36 in 2010 (CIA). Nevertheless, the currency depreciation trends are becoming more visible. In the past years, the Kazakh economy has become extremely susceptible to external shocks, including global ones (Dreger and Fidrmuc 1). However, today, the national currency finds itself in a better situation, compared to the period of transition and economic crisis at the end of the 1990s. Kazakhstan issued its currency in 1993 and, during one year, the exchange rate fell from KZT 5 to KZT 56 for one U.S. Dollar (OECD 63). In the middle of the 1990s, the quality of currency management slightly improved and the exchange rates were maintained at KZT 61 per US Dollar (OECD 64). At the end of the 1990s, when the floating exchange rate was introduced, the national currency again depreciated by almost one-third (OECD 64). That depreciation coincided with the beginning of massive oil exports from Kazakhstan. Since then, the country has been pursuing stable economic growth; inflation was under control. Under the influence of the 2009 global economic crisis, the national currency again depreciated from KZT 120 to KZT 147 per US Dollar (OECD 67). Despite the relative stability of the national exchange rates, structural reforms and their impacts remain highly uneven, and the role of government in the national economy continued to increase (OECD 67). Future exchange rates will depend upon the global market situation, and the quality of government decisions made to advance the country's global economic position.