For the first time in its history, Kazakhstan has surpassed $300 billion in nominal GDP, according to the International Monetary Fund, solidifying its position as the dominant economy in Central Asia. However, economic growth is expected to slow somewhat after the 2025 surge.
Economic growth in 2025
GDP growth accelerated to 6,5% in 2025, up from 5,0% in 2024. This growth was made possible by systematic efforts to diversify the economy. According to the Prime Minister, the growth figures are as follows:
Industrial productionThe industrial production index reached 7,4% at the end of the year. The manufacturing sector registered steady growth of 6,4%. These figures were driven by increases in food production (8,1%), petroleum products (5,9%), chemical products (9,8%), metallurgy (1,2%), and mechanical engineering products (12,9%).
Transport and storageThis sector achieved the highest growth, at 20,4%, due to the increase in freight traffic, mainly by road and rail, as well as the increase in passenger traffic in several regions of the country.
ConstructionGrowth was 15,9%, driven by the execution of social and infrastructure projects, including the construction of schools, medical facilities, transport networks and engineering infrastructure.
Trade and connectivityThe positive trend continued in the commercial sector, which showed growth of 8,9% in the period January-December 2025. Likewise, the information and communication sector grew by 3,6%.
Private consumptionIt registered an expansion of 9,3% despite a slight drop in real household income, suggesting greater reliance on consumer credit by the population.
Economic growth is observed in most regions of Kazakhstan, with the urban centers of Astana, Almaty, and Shymkent standing out in particular.
Current growth drivers
The backbone of the Kazakh economy remains the export of oil and gas. Domestic oil production is expected to remain high, supported by infrastructure modernization at three major fields: Tengiz, Kashagan, and Karachaganak.
However, aware that its heavy dependence on oil exposes the country to high geopolitical and market vulnerability, Kazakhstan has begun a transition towards a knowledge economy and smart infrastructure:
In December 2025, Kazakhstan launched the "Smart City" pilot project, starting in Astana, the capital. This urban digital initiative aims to develop and optimize public services, transportation, security, and environmental management with the support of artificial intelligence. Estimates suggest that the Smart City ecosystem could inject up to 2% additional growth into the country's GDP by 2030.
The main current regulatory challenge is to advance fiscal decentralization, giving greater autonomy to subnational governments so that they can manage their own revenues and respond efficiently to local needs.
Historically, the country's budget management has been highly centralized. However, the design of the upcoming fiscal policy is focused on gradually transferring greater financial and revenue-collecting autonomy to regional governments (Akimats). Increasing accountability and building government capacity at the local level will be a crucial step toward future decentralization.
Inflation and monetary policy
Although inflation has fallen from the highs recorded in previous years, it remains in double digits (around 10,4%-10,5% projected for 2026).
The national currency (Tenge) suffered a depreciation in the foreign exchange market, trading at an average of 521 tenge per dollar in 2025, a drop from 469 in 2024.
Food prices rose 13.5% and service prices 14.4%, due to the adjustment of public utility rates.
To contain prices, the National Bank of Kazakhstan raised the monetary policy interest rate to 18% and kept it unchanged four times in a row, which is a record level for the country.
However, this persistent inflation has affected the purchasing power of the population, especially in rural and low-income areas of the country. There is a trend where households are using credit not for investment or the purchase of durable goods, but as a survival mechanism in the face of the rising cost of living for food and public services.
Recession outlook and projections
GDP growth and inflation, annual % (Asian Development Outlook, April 2026)
Key Macroeconomic Indicators in 2026, % annual (International Monetary Fund, April 2026)
Economic growth is expected to cool slightly after the 2025 surge due to internal and external factors:
On January 1, 2026, the increase in the general Value Added Tax (VAT) rate, from 12% to 16%, came into effect. This is the main tax mechanism that makes goods and services more expensive for the end consumer. Consequently, this higher tax burden will act as a brake on domestic demand this year, thus reducing the rate of economic growth from the previous 6,5% to a projected range of between 4,6% and 4,8% for 2026.
The mining sector will stagnate because production has reached its maximum capacity and must comply with OPEC+ quotas.
International relations and geopolitical risks
Kazakhstan maintains a historical interdependence with the Russian Federation, even after the disintegration of the USSR in 1991. For example, although the Baikonur Cosmodrome is located in the Kyzylorda region of Kazakhstan, it is under Russian control to this day.
After the dissolution of the Soviet Union, Russia maintained significant influence in the former Soviet republics of Central Asia. Today, Moscow remains one of the largest investors in the Kazakh economy. The majority of these investments are in the energy sector, with projects by the state-owned gas company Gazprom and the oil company Lukoil.
In terms of security, Kazakhstan is part of the Collective Security Treaty Organization, a Russian-led military alliance that helped end protests in January 2022 following a rise in gas prices.
In 2026, dependence on the Caspian Pipeline Consortium, which runs through Russia to the port of Novorossiysk, is the country's main operational risk. Kazakhstan is investing heavily in the port of Aktau and the trans-Caspian connection to reduce its reliance on Russian infrastructure.
China is also a leading candidate for investment in the Kazakh economy, particularly in oil and gas resources. In 2005, the China National Petroleum Corporation acquired PetroKazakhstan (the largest independent oil company in the former Soviet Union) and invested in a pipeline to transport oil to the Chinese border.
China and Kazakhstan are participating in the Digital Silk Road; Chinese digital companies are investing in the development of the "Smart City" project.
Kazakhstan became one of the founding members of the Shanghai Cooperation Organisation (2001), which evolved from the Treaty on Deepening Military Confidence in Border Regions after the collapse of the USSR. This organization now prioritizes multilateral economic cooperation, trade facilitation, and investment in Eurasian connectivity infrastructure.
Furthermore, since the establishment of diplomatic relations between Kazakhstan and Israel in 1992, the two countries have been expanding cooperation in economic, scientific, and technological areas. Kazakhstan was the fifth state to join the agreements with Israel (the Abraham Accords) in November 2025, brokered by the US president, and the first since the start of the war in Gaza. The agreements aim to normalize relations between Israel and Arab and Muslim-majority countries and to develop economic cooperation.
However, although Kazakhstan is an energy exporter and benefits in the short term from high prices, a prolonged escalation in the Middle East could destabilize global supply chains and increase import costs and inflation.
Conclusion
Kazakhstan already ranks among the world's 50 most advanced economies. It has solidified its position as a leader in economic growth in the Central Asian region. The oil boom is being used to finance the structural reforms, urban digitalization, and transport infrastructure necessary to create a sustainable and competitive economic model in the post-oil era.
