Kazakhstan’s Economic Surge: A 6% GDP Growth Spurred by Key Sectors

Kazakhstan’s economy has kicked off 2025 on a strong note, with GDP growing by 6.0% year-on-year (y/y) in the first four months of the year. This robust expansion, driven by infrastructure investments, energy production, and manufacturing, positions the Central Asian nation as a regional economic outlier amid global slowdowns. Below, we dissect the drivers behind this growth, evaluate risks, and assess opportunities for investors.

The Sectors Fueling the Boom

The surge is anchored by two pillars: transport and construction, and industry.

Transport & Construction: The Growth Engine

Infrastructure projects funded by the National Fund and government spending have been pivotal. In Q1 2025 alone, the transport sector expanded by 21% y/y, while construction grew by 16.9% y/y. These figures reflect aggressive investments in roads, railways, and urban development.

Industry: Manufacturing and Mining Lead

The broader industrial sector grew by 6.7% y/y in Q1, with standout performances in manufacturing (8.7% y/y) and mining (6.1% y/y). Manufacturing’s rise reflects expansions in metallurgy, electronics, and machinery production—a shift toward value-added goods. Meanwhile, mining benefited from the test launch of the Future Growth Project (FGP) at the Tengiz oil field, boosting oil output.

Trade and Communications: Mixed Signals

While trade growth slowed to 6.3% y/y in Q1—possibly reverting to long-term trends after a late-2024 surge—the communications sector underperformed, with no growth noted. This divergence highlights uneven sectoral momentum, a risk for sustained GDP expansion.

Macroeconomic Backdrop: Fiscal Stimulus and Monetary Tightening

• Fiscal Policy: The government withdrew KZT 1.45 trillion (US$3.1 billion) from the National Fund in Q1 to fund projects, though falling oil revenues reduced inflows to the fund by nearly half y/y.
• Monetary Policy: The National Bank raised its base rate to 16.5% to curb inflation, which hit 10% in March 越年. The tenge’s appreciation to 503.4 KZT/USD in March reflected central bank interventions, including foreign exchange sales.

Key Risks and Challenges

1. Oil Dependency: Mining’s growth hinges on oil prices remaining near the $70/barrel assumption in official forecasts. A price drop could jeopardize the 5.3% annual GDP growth target.
2. Private Investment Lag: Despite record FDI in 2024 ($15.7 billion), domestic private investment remains low, limiting long-term sustainability.
3. Geopolitical Tensions: Sanctions risks and regional instability could disrupt trade and investor confidence.

Outlook: Opportunities Amid Uncertainty

The government’s focus on diversification—particularly in critical raw materials (CRMs) like lithium and uranium—could unlock new growth avenues. Additionally, infrastructure projects and digital transformation (e.g., fintech) offer investment opportunities. However, structural reforms to stabilize the tenge and reduce commodity dependence are critical.

Conclusion

Kazakhstan’s 6.0% GDP growth in January-April 2025 underscores its resilience, driven by infrastructure, manufacturing, and energy. With the FGP set to ramp up oil production and FDI inflows hitting record highs, the economy is well-positioned for continued expansion. However, investors must monitor oil price fluctuations, private investment trends, and geopolitical risks. For now, the data points to a bullish near-term outlook, with sectors like construction, mining, and technology poised to lead the charge.

This growth narrative, supported by strong fiscal stimulus and sectoral momentum, makes Kazakhstan a compelling emerging market play—but one that demands vigilance toward its vulnerabilities.