Overview of Kazakhstan's socio-economic development over 30 years: achievements and challenges


Overview of Kazakhstan's socio-economic development over 30 years: achievements and challenges

Experts of the Center of Economic Research Institute JSC

This year, 2021, marked a big date - the 30th anniversary of state independence of the Republic of Kazakhstan.

 Over the years, the country has made significant progress in socio-economic development and foreign relations.

 1.   The country's population grew by 2.5 million, from 16.5 million in 1991 to 18.9 million at the beginning of 2021 (an increase of 13%).

 2.   The average life expectancy of people in Kazakhstan has increased from 65 to 73 years.

3.   Since the 2000s, the country's urban population has grown by 33%, from 8.4 million to 11.2 million people.

 4.   The income of the population has increased 9 times over the years of independence.

 5.   The purchasing capacity of the population has increased 4.6 times since 1993.

 6.   The proportion of the population with income below the subsistence minimum has fallen from 34.6% in 1995 to 5.3% in 2020.

 7.   The minimum wage, subject to annual indexation, rose from KZT 13 in 1993 to the current KZT 60,000.

 8.   GDP growth rates have been on a positive trajectory since 1999 and have been increasing continuously for 21 years, despite a succession of crises. The exception is the pandemic 2020, where economic growth declined by 2.6%. However, 2000 to 2007, the economy grew at an average annual rate of 10%, falling to 4-5% thereafter.

 9.   Per capita GDP has increased 13 times in dollar equivalent and 720 times in local currency during the years of independence. Whereas in 1993 per capita GDP was about $700, by 2020 it had reached $9,100. In real terms, GDP increased by 2.4 times.

10.  Economic diversification. By 2018, more than 500 new products have been launched. For example, in 2020, production of passenger cars reached 65,000 units, while 8,200 trucks were produced - an almost twofold increase compared to 2019.

 11. Inflation has dropped significantly. Whereas in 1992 we had hyperinflation at 3,060.8%, in 2019 it has slowed down to 5.4%. The lowest inflation rate was recorded in 2018 at 1.9%.

 12. Decline in the unemployment rate. At the beginning of its development, the country had a high unemployment rate of 7.5% in 1994, which peaked in 1999 at 13.5%. The rapid modernisation of the economy and the creation of new industries, together with the active development of entrepreneurship, have reduced the unemployment rate to 4.9%.

 13. Over the years of independence, the country has attracted over $365 bln in foreign direct investment (FDI) from over 120 countries. Most of the investment - over 47% - are from the EU countries ($8.9 bln in 2020), 13% from the US ($2.2 bln), and about 11% from the UK and PRC (about $1.8 bln in total). Major investors also include the Netherlands, Switzerland, France, Russia, Italy, Japan, Belgium and Canada.

14.  The dynamics and structure of foreign investment in Kazakhstan have changed. Whereas previously projects in the extractive industries dominated, now there is a high activity of investors in other sectors as well, including the processing sector. Today, Kazakhstan has embarked on a course of efficient use of investment opportunities for modernisation, structural transformations and sustainable growth rates of the national economy, contributing to a high quality of life for the country's population.  Translated with www.DeepL.com/Translator (free version)

 15.  Increased investment in the economy. One of the important factors reflecting changes in the structure of the national economy is investment in fixed capital (IFA), which has been increasing every year since 1997, except for 2010 (-3.0%) and the pandemic 2020 (-3.9%). Since 1991, investment in the economy has increased 2.7 times in real terms and 21 times in nominal terms, from KZT 0.6 tln to KZT 12.3 tln.  Translated with www.DeepL.com/Translator (free version)

The objective now is to bring fixed capital investment to 30% of GDP and foreign direct investment to $30 bln by 2025.

 16.  Strength and sustainability of the economy. International rating agencies: S&P, Fitch, Moddy's have rated the Kazakhstan economy as stable and sustained against COVID-19 and volatile oil prices.

 17.  The volume of foreign trade has increased significantly. In 2020, it amounted to $86.5 bln compared with $1.5 bln in 1991. Exports increased from $900 mln to $47.5 bln, and imports increased from $600 mln to $38.9 bln.

 18. The export potential of the economy has grown considerably. Thus, Kazakhstan exports its products to markets in over 100 countries. The main trading partners: the European Union, Russia and China. Non-commodity exports have been on the rise in recent years, exceeding $15.7 bln in 2019 ($15.3 bln in 2020).

 19.  The share of SMEs in the economy is increasing. In 2020, it stands at 31.6% of GDP. The plan is to increase it to 35% by 2025. Today, more than 78% of GDP is produced by the private sector.

 20.  SMEs output doubled (2020 to 2010) and employment in the sector reached 3.4 million people.

 21.  The number of operating businesses has increased to 1.4 million.

22.  Introduction of a national currency. In 1993, Kazakhstan introduced its own national currency,  tenge. While currency inflation was very high after gaining independence, reaching into the four digits, the introduction and re-pricing of the currency reduced explosive inflation. Throughout the existence of the national currency, tenge has gone through several periods of devaluation.

 23.   One of the most memorable events was in 2015, when the national currency was allowed to float freely. The exchange rate determined by supply and demand is one of the fundamental principles of neoclassical economic theory.

 24.   Human Capital Development. The Bolashak International Education Scholarship was launched in November 1993. Since his presidency, Yelbassy Nazarbayev has asserted the importance of education and the development of human capital in the country. The programme gives the young generation of Kazakhstan the opportunity to study at the world's best universities. Educated and qualified personnel are called to develop the economy in many directions, opening up new activities, businesses, etc. Over the entire period, some 15,000 Kazakh students have been educated at the best foreign universities and to this day work for the good of society in virtually all sectors of the economy.

 25.   In 1998, a pension reform was introduced in Kazakhstan. It was very important to properly value work and pay decent pensions to people who had worked during the Soviet era. Beginning in 1998, all workers started to pay 10% of their income into an accumulative pension fund. In other words, there was a gradual transition from the Soviet distributive social security system, based on intergenerational solidarity, to an accumulative pension system.

 26.   According to experts, Kazakhstan's pension system is considered to be one of the best not only in the CIS, but also among many developed countries of the world. At present, Kazakhstan has a multilevel pension system consisting of three levels. Thus, the principle of diversification of the sources of pension payments (when there are several sources of pension payments in the system) allows the Kazakh pension system to remain financially sustainable and provide a higher level of pension income.

27.   One of the main results of the country's macroeconomic stability is the establishment of the National Fund in 2000. This made it possible to reduce the country's dependence on unfavourable price changes on world markets, as well as to accumulate resources for future generations.  At the end of June 2021, the assets of the National Fund in foreign currency totalled $57.3 bln. Overall, the country's international reserves are about $95 bln.

 28.    Chairmanship of the OSCE. Kazakhstan's chairmanship of the Organisation for Security and Co-operation in Europe in 2010 was a landmark event in the history of our state. For the first time in history, the OSCE governance has been transferred to a post-Soviet republic. Kazakhstan is the first CIS member state and the first Asian, Muslim and Turkic-speaking country in the history of one of the most authoritative organisations in the Eurasian space to chair the OSCE.

 29.    Accession to the EAEU. The need to increase the domestic market to attract more foreign investment prompted the country to join the Eurasian Economic Union (EAEU) in 2015, and entrepreneurs starting a business in Kazakhstan now have free access to a more than 185-million market. The EAEU was established in order to comprehensively modernise, cooperate and enhance the competitiveness of national economies and create conditions for stable development to improve the living standards of the population of the member states. It should be noted that the idea of establishing this economic union belonged to the First President, Yelbassy N.A. Nazarbayev. Today, Kazakhstan has a free trade zone within the EAEU with countries such as Serbia, Singapore, Vietnam and Iran (partially). In the long term, markets in Israel, Egypt, Mongolia and other countries will open up.

 30.   Also in 2015, Kazakhstan completed almost 20 years of accession to the World Trade Organisation (WTO). WTO membership allows Kazakhstan to trade with its member states in a single legal framework, which also increases the country's investment appeal in the world market. The WTO, by the way, unites around 95% of all global trade.

Today, Kazakhstan is facing more ambitious objectives outlined by Yelbassy Nursultan Nazarbayev in the Strategy-2050. The main goal of the Strategy is for Kazakhstan to become one of the thirty most developed countries in the world. For this, of course, certain steps have already been taken, but it is necessary to achieve qualitative growth, when the standard of living of each citizen of Kazakhstan would be no worse than in Western countries.

In this regard, a transition to a new model of economic growth based on the formation of a diversified and export-oriented economy with developed infrastructure and strong regions has been launched.

In the medium term, there is a focus on diversifying the economy, moving away from commodity dependence and, most importantly, improving the well-being of the people of Kazakhstan.


All articles

Views: 0
Saved: 21.12.2021

subscribe to the newsletter

Site policy
When working with site materials, it is allowed to use text with a mandatory hyperlink to the source. The editors of the site do not always share the opinions of the authors of the articles.


©2023 Барлық құқықтар сақталған.

Wait please...

Хорошая погода, не так ли?

Subscribe to the newsletter

The operation completed successfully.