Kazakhstan

Kazakhstan Economy

Kazakhstan is the largest nation and economy in Central Asia, the seventh largest nation by area in the world and the second largest (after Russia) of the former Soviet Republics. It is bordered by Russia, China, Kyrgyzstan, Uzbekistan, Turkmenistan and the Caspian Sea. The population of some 14 million is highly literate and well educated. Kazakhstan is a stable democratic country and is considered a “model transition economy” in gaining its independence from Soviet centralized command economy to become a free market economy.

The country is headed by Nursultan Nazarbayev who was re-elected in 2005 for a seven year term. Under Nazarbayev’s presidency, Kazakhstan has made significant progress towards developing a free market economy. The country has a friendly foreign investment climate and is a member of the United Nations, the World Customs Organization the Organization for Security and Cooperation in Europe among others. Kazakhstan is also an observer at the World Trade Organization and an active participant in the North Atlantic Treaty Organization's (NATO) Partnership for Peace program.

The country has good infrastructure with a well developed national grid and network of all year roads, railways and airports. It possesses enormous fossil fuel reserves as well as minerals and metals. It also has considerable agricultural potential with its vast steppe lands accommodating both livestock and grain production, as well as developed space infrastructure, which took over all launches to the International Space Station from the Space Shuttle. Kazakhstan's industrial sector rests on the extraction and processing of these natural resources and also on a relatively large machine building sector specialising in construction equipment, tractors, agricultural machinery, and some military items.

Since 2000, Kazakhstan's economy has grown sharply, aided by increased prices on world markets for Kazakhstan's leading exports - oil, metals and grain. Since 2001, GDP has been among the highest in the world. In 2006, Kazakhstan’s economy grew by 8.5% with GDP per capita growth reaching US$8,536. Business with booming Russia and China, as well as neighbouring CIS nations have helped to propel this growth.

The laws of Kazakhstan have established a single investment regime for both domestic and foreign investors. The country guarantees stability of contracts where investors enter into contracts with Kazakh State agencies, with the exception of a change of law intended for national or ecological security, public health or morality, or if it affects the procedure or conditions of import, production and/or sales of excisable goods.

Kazakhstan's bond rating has recently been upgraded by Moody's to BAA3 with a positive outlook, which is similar to Mexico.

Mineral Resources in Kazakhstan

The Republic of Kazakhstan possesses significant fossil fuel reserves, along with mineral and metal deposits; its industrial sector is based on the extraction and processing of these natural resources. Since gaining its independence in 1991 after the break up of the Soviet Union, Kazakhstan has experienced rapid economic growth, mostly attributed to its natural resources. Kazakhstan enjoyed double-digit growth in 2000-01 - 8% or more per year in 2002-07 - thanks largely to its booming energy sector, but also to economic reform, good harvests, and foreign investment. The economic expansion is due to increased production of oil, minerals and other commodities, supported by high oil prices and rising foreign investments. Kazakhstan's substantial mineral resources include the world's largest chromium, vanadium, bismuth and fluorine reserves. The country is also a major producer of iron, coal, uranium, lead, zinc, tungsten, molybdenum, borates, phosphorite, copper, potassium and cadmium. It also ranks third amongst CIS countries in terms of gold reserves. Almost all gold mining companies and properties have been fully privatized in Kazakhstan, the only country within the former Soviet Union to have done so. This allows gold doré and gold-copper concentrates to be freely exported and sold.

Coal reserves in Kazakhstan are approximately 160Bt from 155 deposits in 10 major coalfields principally comprising energy and coking coal. The country also possesses enormous iron ore resources, containing 50-60% of iron. Kazakhstan contains world class phosphorite deposits in terms of thickness and quality. It is a major producer of alumina (1.55 Mtpa) and is the eighth largest copper producing country in the world. Kazakhstan occupies a large proportion of the Caspian oil province, where reserves are estimated to contain 20 billion barrels of oil and 700,000,000t of gas condensate, attracting more than US$15 billion in foreign direct investment over the last decade.

Oil and gas is the leading economic sector. Production of oil and gas condensate in Kazakhstan amounted to 61.9 million tons in 2005, which was 4.3% more than in 2004. Kazakhstan exported 52.4 million tons of oil and gas condensate a year in 2004 and 2005. Natural gas production in Kazakhstan in 2005 amounted to 14.5 billion cubic meters, a 25% increase from 2004. Kazakhstan holds about 4 billion tons of proven recoverable oil reserves and 3 trillion cubic meters of gas. Industry analysts believe that planned expansion of oil production, coupled with the development of new fields, will enable the country to produce as much as 3 million barrels per day by 2015, lifting Kazakhstan into the ranks of the world's top 10 oil-producing nations. Kazakhstan's 2005 oil exports were valued at US$17.4 billion, representing over 70% of overall exports.

Kazakhstan is the third country in the world for uranium production volumes, and it owns the world second biggest uranium reserves after Australia. It has also the largest silver, zinc and nickel markets in West Asia.