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Library of Congress – Federal Research Division

Country Profile: Kazakhstan, December 2006

early 2000s, oil has accounted for more than half of Kazakhstan’s industrial output, and many other industries are dependent on it. Between 1994 and 2003, frequent changes of prime minister made government economic policy inconsistent and commitments to economic reform and diversification ineffectual. In the post-Soviet era, the labor-intensive agricultural sector became steadily less productive. The machine-building sector, producing construction equipment, agricultural machinery, and some defense items, has grown, however. As much as 30 percent of Kazakhstan’s GDP is accounted for by the “shadow economy,” particularly in rural areas. A key economic goal is membership in the World Trade Organization; negotiations were active in late 2006. As oil continues to spur rapid growth, key goals of mid-term economic policy are diversifying the economic base by expanding non-oil manufacturing, raising agricultural productivity, and improving the environment for small and medium-sized enterprises.

Gross Domestic Product (GDP): Kazakhstan’s GDP has increased every year since 2000. In 2004 the estimated GDP was US$39.8 billion, an increase of 9.3 percent over 2003. The 2005 figure was US$47.4 billion. In the first half of 2006, GDP grew by 9.3 percent, and the government forecast growth of 10 percent in 2007. In 2005 per capita GDP was US$3,118. Services contributed 54.7 percent, industry 38.6 percent, and agriculture 6.7 percent of the 2005 GDP.

Government Budget: After the national budget ran deficits of 3 to 4 percent of gross domestic product in the late 1990s, revenues and expenditures were approximately equal in the first years of the 2000s because of increased oil revenue and currency reform. In 2004 tax cuts and increased expenditures brought a budget shortfall of about US$1.2 billion. The shortfall in 2005 decreased to US$250 million. The 2006 national budget called for revenues of US$11.0 billion and expenditures of US$11.8 billion, creating a projected shortfall of US$800 million. The approved budget for 2007 calls for expenditures of US$14.9 billion and revenues of US$16.6 billion, a projected surplus of US$1.7 billion. In 2004 Kazakhstan reduced its value-added and payroll tax rates, while the corporate tax rate remained the same.

Inflation: In 1999 devaluation of the national currency caused inflation to rise dramatically, but the rate for 2000 was only 9.8 percent, and it has remained below that level in subsequent years. In 2004 Kazakhstan’s inflation rate was 6.9 percent, and in 2005 it rose slightly to 7.6 percent. The official target for 2006 and 2007 was in the range of 5.7 to 7.3 percent.

Agriculture, Forestry, and Fishing: Agriculture is the single largest employer, but between 1990 and 2005 its share of gross domestic product shrank from 35 percent to 6.7 percent. Few agricultural products have export value. The main agricultural products are grain, sugar beets, sunflower seed, fruits and vegetables, beef, and wool. Kazakhstan has agricultural land of good quality, but its continental climate and soil-depleting agricultural practices have limited exploitation. Land privatization has been uneven and inefficient. Landholding law reforms passed in 2003 failed to encourage trading in land, which would improve agricultural efficiency. Aided by good weather and a three-year rural revival program, agricultural output grew by 6.7 percent in 2005 after averaging 1.6 percent growth in the previous four years.

Of the 4.8 percent of Kazakhstan’s territory that is forested, about 9 percent is nominally protected. Forest land is concentrated along the Chinese and Kyrgyz border and north of the


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