Successfully investing in Kazakhstan

Kazakhstan's economy demonstrated robust growth in 2024. According to preliminary official figures, real gross domestic product rose by 4.8 percent compared with the previous year. Nominal GDP reached around 135 trillion tenge (approximately 288 billion US dollars). Each sector demonstrated particular growth, with agriculture expanding by 13.7 percent, construction by 13.1 percent, wholesale and retail trade by 9.1 percent, and transport by 8.5 percent. The IT and communications sector also grew solidly at around 5 percent. In contrast, the industry as a whole exhibited more moderate growth (+2.8 percent), primarily due to stagnation in the significant mining sector (where growth was almost negligible). In contrast, the manufacturing industry demonstrated robust growth, with an increase of 5.9 percent.

Inflation eased somewhat after the price surge of 2022/23. The average inflation rate for 2024 was 8.6 percent, down from 9.8 percent in the previous year. It is important to note that food prices increased at a significantly slower rate than in 2023 (+8.5 percent), with a more modest rise of +5.5 percent. However, price pressure remained high for services (over 13 percent). The government anticipates a further easing of inflation in 2025, with the target range for that year set at 5.5–7.5 percent. However, in view of current trends, the Ministry of Economic Affairs has admitted that the inflation rate is likely to reach ~10 percent by the end of 2025. Nonetheless, the economic forecasts for 2025 continue to be optimistic. The government anticipates GDP growth of approximately 5–5.6 percent. International financial institutions also forecast growth of 4.5–5 percent for 2025. Overall, Kazakhstan is expected to embark on a development path that will almost double its economic output by 2029 (to approximately 450 billion US dollars) – an ambitious goal that will require substantial investment and reforms.

In 2024, Kazakhstan's various economic sectors developed in a highly uneven manner. The primary growth drivers were non-resource-related industries and construction investment. As previously stated, the agricultural sector (+13.7 percent), the construction sector (+13.1 percent), the trade sector (+9.1 percent) and the transport and logistics sector (+8.5 percent) have all demonstrated remarkably high growth rates.

In response to supply chains being disrupted by geopolitical factors, Kazakhstan is strategically developing alternative trade routes. The Trans-Caspian Corridor, also known as the 'Middle Corridor', is a key focus of the project. This route, which stretches from China via Kazakhstan, Azerbaijan and Turkey to Europe, is receiving particular attention. President Tokayev has identified this route as a priority to reduce west-east traffic reliance on Russian territory. In line with this strategy, the government is investing in the expansion of port infrastructure on the Caspian Sea, railway capacity and customs simplifications along this corridor. Kazakhstan has consolidated its role as a 'safe haven' for companies in the region.

The Kazakh government is continuously working to improve the investment climate. President Tokayev has emphasised his desire to create a 'fair and open' economic system that offers equal opportunities to domestic and foreign entrepreneurs.

Special economic zones (SEZs) are a key instrument for improving the investment climate. As of current, there are 14 Special Economic Zones (SEZs) in the country, which are spread across the entire territory and promote a variety of industries. Investors in these zones enjoy a range of benefits, including exemption from corporate income tax in most cases, streamlined visa processes and preferential access to infrastructure. Examples: The SEZ 'Astana - New City' promotes the construction industry and logistics in the capital, the SEZ 'Pavlodar' promotes the chemical and aluminium industries, 'Taraz ChemPark' promotes the petrochemical industry, 'IT-Parc Almaty' promotes the tech sector, etc. In addition to the SEZs, there are also several industrial parks offering preferential conditions. According to the law, SEZs are established for up to 25 years, with some existing zones such as Sehender 'Aktau Port' on the Caspian Sea or 'Khorgos Eastern Gate' on the Chinese border designated as logistics hubs along the New Silk Road. The government is responsible for monitoring the effectiveness of the Special Economic Zones (SEZs), and to date, more than 150 companies have been active there, having made considerable investments and created thousands of jobs. Nevertheless, there is ongoing discussion about how to increase the utilisation of the zones and prevent abuse of the benefits.

The Astana International Financial Centre (AIFC) is a prestigious project with the aim of improving the financial and investment environment. This financial centre in the capital (founded in 2018 on the EXPO site) offers a unique special jurisdiction based on English common law and is staffed by international judges. It functions as a 'state within a state' for financial and professional services companies, offering participants tax-free conditions until 2066, free convertibility and Western regulatory standards. The AIFC has rapidly emerged as the preeminent financial hub in Central Asia. As of the end of 2024, the AIFC had registered over 3,500 companies from 85 countries. In 2024 alone, 1,100 new registrations were added, which is a significant increase on the previous year. In addition to banks and insurers (36 percent of which are financial companies), the AIFC companies include many holding companies, fintech start-ups, crypto exchanges and service providers. The broad spectrum of countries from which it is sold (USA, UK, China, Turkey, Singapore, etc.) demonstrates its global appeal.

Furthermore, the government is implementing additional special zones for innovation and digitalisation (e.g. techno parks) and public-private partnerships in the infrastructure sector. Many observers have noted a noticeable improvement in the general investment climate, citing enhanced investor rights protection and Kazakhstan's commitment to providing stable framework conditions. As outlined in the following section, there are still some challenges to be addressed. However, the country is sending strong signals that it is willing to welcome foreign investment and that it is prepared to create attractive conditions for it.