Kazakhstan macro: The economy becomes more resilient to external shocks
The Ministry of Finance released budget execution statistics that looked fairly positive, although revenues likely fell short of government expectations. Kazakhstan faced some bad luck early in the year when the CPC oil terminal was damaged, hurting both economic growth and budget revenues in January-February. In the months that followed, however, higher oil prices helped improve the country’s economic situation. After a sharp drop in January (about 20% y-o-y), the mining sector gradually recovered, and in 1H26 it was down just 4.0% y-o-y, with June alone posting 1.8% y-o-y growth. Oil exports and budget revenues still suffered, but other parts of economy performed better. Manufacturing continued to grow rapidly, largely fueled by FDI.
Budget execution statistics fell slightly short of expectations, particularly at the regional level, where tax revenue collection reached only 42.8% of the annual plan, compared to previous years when results were well ahead of target, with moderate change to the plan this year. Nonetheless, budget numbers show that the Kazakh economy is in good shape, even though hopes for higher VAT inflows turned out to be too optimistic. A strong tenge is also weighing on budget revenues, including corporate profits, especially from companies paying profit taxes to local budgets. Even so, the economy has managed to handle several geopolitical shocks this year and continues to draw FDI, which remains a key driver in the ongoing diversification of the country’s economy.
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