Trade and construction have emerged as important engines of growth in Kazakhstan’s economy, as it shifts away from reliance on natural resources, Sultan Zhumagali, head of the analytics and research department at Almaty-based BCC Invest, said in an interview with bne IntelliNews. 

According to BCC Invest, one of Kazakhstan’s longest-established investment companies, 2025 is set to be a year of continued recovery for Kazakhstan following a period of economic uncertainty, as outlined in its latest macroeconomic outlook report, which projects GDP growth will come in at 4.4% this year. 

Zhumagali points to new drivers, specifically trade and construction, whose rapid expansion has seen them replace the traditionally strong oil and gas sector as the impetus behind Kazakhstan’s economic growth. These in turn are boosted by Kazakhstan’s growing population. 

"Nowadays the main growth driver of the Kazakhstan economy is trade, then construction. The population growth and the economic stability in the country lead a lot of people to trade, and more new houses are being constructed because of the government-supported projects,” Zhumagali told bne IntelliNews. “Kazakhstan has lot of oil and gas, but the traditional growth drivers such as oil and gas are slowing down.”

This is partly a result of movements in oil prices on international markets. BCC Invest points to the consensus of world experts’ forecasts that indicates the oil price will decline to $75.6 per barrel by the end of the year. Kazakhstan’s oil production is set to grow only modestly from 90.3mn tonnes in 2024 to 104.8mn tonnes in 2029, a 16.1% rise. 

“When we talk about the long term, for 5-10 years oil production will increase, then the oil production will decrease from 2035. What will happen next is a really good question. The next 5-10 years are really important to get prepared for this. We need to develop other industries, not to only believe in oil and gas,” said Zhumagali. 

New industries emerge 

Ahead of this change, Kazakhstan’s economy is already diversifying, a process encouraged by government efforts. 

“In addition to traditional sectors such as natural resource extraction, Kazakhstan is actively developing other sectors of the economy and places high demand on the development of IT products,” says Zhumagali, highlighting the country’s emergence as a regional leader in the development of the fintech ecosystem. “We are really proud of our fintech companies,” he adds. 

In the raw materials sector, Kazakhstan is increasingly positioning itself as a key supplier of critical raw materials (CRMs), including uranium and lithium, which are essential for high-tech industries. 

“Kazakhstan has significant reserves of elements such as rare earths, uranium, lithium and other resources that are necessary for the production of high-tech products, including batteries, semiconductors and renewable energy sources. In recent years, Kazakhstan has been actively developing cooperation with the EU and the United States in this area,” says Zhumagali.

But, he points out, Kazakhstan is looking not just to export raw materials, but to develop deep processing of the minerals it possesses. “The government pursues a policy of stimulating investments in the creation of processing facilities, which will increase the added value of products and minimise dependence on the raw material model of the economy. In this sense, the demand for CRMs from the world's leading economies not only benefits Kazakhstan in the short term, but also creates opportunities for industrial modernisation and the formation of new industries.”

Capital market development 

At the same time, Kazakhstan’s local capital markets have seen impressive growth over the past five years, with the KASE Index averaging over 20% annual expansion – outpacing inflation and mitigating the impact of tenge depreciation against the US dollar.

“The market has been very dynamic, and we are seeing a lot of deals happening,” says Zhumagali. “Brokerage firms are actively participating, and investor confidence is growing.”

BCC Invest is a key player in this sector. With over 25 years in operation, it is the second-largest investment bank in Kazakhstan by total assets. The firm provides traditional brokerage services, as well as M&A advisory, IPOs and SPOs, and also facilitates bond issuances and financial consulting.

Part of the increase in investment is down to a new wave of retail investment, driven by improved digital access and a desire for asset diversification.

Commenting on the rise in retail investment, Zhumagali says: “It’s happening first of all because of the investment companies improving their apps for retail investors. Nowadays every investment company in Kazakhstan has their own mobile app which allows you buy stocks and bonds very easily. They [retail investors] want to diversify their assets. You can see some money is going to the market from bank deposits and from the real estate sector.” 

Two Kazakhstani companies, Kaspi.kz and Air Astana, carried out major international IPOs in 2024. While Zhumagali does not anticipate similarly large-scale international IPOs in the near future, domestic offerings could gain traction.

“At the moment, I do not see any potential issuers for IPOs on international exchanges. However, in the near future, IPOs of Kazakhstan Temir Zholy (KTZ) and Otbasy Bank are possible,” he says. 

“Kazakhstan Temir Zholy may conduct an IPO in 2025. This goal has been set for the company by the government, which included KTZ in the comprehensive privatisation plan until 2025, as well as by its shareholder, the Samruk-Kazyna fund.” 

According to Zhumagali, the success of KTZ's IPO could depend on factors such as reducing its debt burden and increasing tariffs. He points out that back in 2023, the company already took steps to reduce its debt, bringing down the debt/Ebitda ratio to 4.52 from 5.28 the previous year. 

Ongoing challenges

While growth is expected to be reasonably strong this year, BCC Invest points to several challenges.

“Three key objectives – economic growth, price stability and social support – require considerable effort, especially given that supporting one area often leads to imbalances in another, thereby creating new challenges,” Zhumagali says. 

The government has responded to recent challenges with fiscal stimulus, including transfers from the National Fund. “As a result, we emerged from the pandemic crisis, achieving GDP growth of 5.1% in 2023. However, this has led to some overheating of the economy. In our view, the optimal GDP growth rate should be in the range of 4-4.5%, as higher growth rates pose the risk of overheating, while lower rates increase the risk of stagnation.” 

BCC Invest forecasts headline inflation in the range of 8.4-9.5%, settling around an annual 8.9% by the end of 2025. The projection is somewhat higher than those from local institutions and international financial institutions (IFIs). 

Another issue is the performance of Kazakhstan's currency, the tenge. “[The tenge weakness] happened because our balance of payments is negative,” explains Bakbergen Toktasyn, macroeconomist in the BCC Invest Analytics and Research Department. “We have a positive trade balance for net exports, but our primary income is more negative than net exports because we have a lot of liabilities to pay … When we have a weak price for oil, we have a weaker tenge.”

The National Bank has followed a market-driven exchange rate policy since 2015. While the bank intervenes occasionally, it primarily aims to minimise volatility.

For 2025, “the base case scenario sees the tenge at 534 to the US dollar,” Zhumagali says. “Kazakhstan has sufficient international reserves – $44bn at the start of Q4 2024 – to support stability, but without interventions, the tenge would likely depreciate further.”

Despite the risks, a number of sectors in Kazakhstan’s economy are evolving rapidly. With strategic shifts toward fintech and critical raw materials, the country is positioning itself for long-term financial sector growth. However, maintaining stability while fostering growth will remain a delicate balancing act.