Growth slowed in Kazakhstan in 2012 to 5.0% from 7.5% in 2011, as industry largely stagnated and severe drought cut agricultural output by nearly 18%. Inflation also slowed. Rapid import growth, linked partly to public investment programs, narrowed the current account surplus to 4.3% of gross domestic product (GDP) from 7.2% in 2011, but assets in the country’s sovereign wealth fund again increased. Growth is expected to recover slowly, to 5.2% in 2013 and 5.6% in 2014, as continued government investment spending boosts domestic demand.

Sources: ADB estimates.

Economic performance

After 2 years of strong recovery, economic growth slowed to 5.0% from 7.3% in 2010 and 7.5% in 2011. The service sector was again the main source of growth, while the contributions of agriculture and industry fell to their lowest levels in 15 years.

Services, which generate more than half of GDP, rose by 9.8%, reflecting more than 14% growth in retail and wholesale trade and smaller gains in communications, transport, and hotels and restaurants.Professional services rose by 16.2% and public services by 12.2%.

Economic prospects

GDP is forecast to grow by 5.2% in 2013 and 5.6% in 2014, largely reflecting higher domestic demand, including investment spending under the industrialization program and the more active investment of assets of the National Fund of the Republic of Kazakhstan (NFRK, the sovereign wealth fund). Some $1.5 billion of NFRK assets will be lent to the national oil company KazMunaiGas in 2013, and $2.5 billion more in 2014. Economic performance will also depend on demand from Kazakhstan’s major trading partners: the European Union, Russian Federation, and People’s Republic of China. Production from the Kashagan project, postponed again in 2012, is now expected to begin in the second half of 2013 with limited scope before expanding in 2014 to boost oil exports.

Source: ADB. 2013. Asian Development 2013. Manila.

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