According to the World Bank’s forecasts, Kazakhstan is expected to experience a moderate acceleration in economic growth in 2024. The approximate growth of real GDP is projected to be 4%. It should be understood that this growth is likely to be achieved through the hydrocarbon sector, specifically by increasing oil production.
What supports the country?
Kazakhstan has long been renowned for its natural resources, which once helped elevate the country’s economy to the level of developing nations. However, the strong dependence on fossil fuels makes Kazakhstan vulnerable to economic challenges, such as fluctuations in raw material prices that directly impact productivity.
As experts explain, Kazakhstan’s economy can be broadly divided into several parts.
First, and without exaggeration, is exports, which bring the main profit to the country. Primarily, this includes oil, gas, concentrates, various metals, and agricultural products.
Thus, the oil and gas sector constitute about 11% of our entire economy. However, when considering related industries, it amounts to 19% – that’s how much is allocated to exports.
In this regard, Kazakh experts are concerned that it plays too significant a role when it comes to currency inflows. It is thanks to exports that we can afford both imports and, one must bear in mind, that resources are not infinite.
Not ahead of the curve
Some financiers argue that the role of banking and trade should not be dismissed. The manufacturing share of SMEs is about 25-30%. However, this is not a reason to relax. It is necessary to diversify the economy already at this stage. This will allow Kazakhstan not to depend on natural resources by 70-80%.
At the same time, experts challenge the fact that the oil needle hinders Kazakhstan from becoming an industrially developed country.
When considering the volumes of exported oil, our country is in the «average» category. The export of mineral fuel per person in Kazakhstan is 2.5-3 thousand dollars per year, while in Qatar, it is 42 thousand dollars, Norway – 39 thousand dollars, Kuwait – 22 thousand dollars per year, which is several times more. This is precisely why we do not live as prosperously as Arabs, for example, but also do not scrape by as in third-world countries.
When oil prices plummet, Kazakhstan does not plunge into unemployment.
While there is still something to take…
One of the main threats of persistent oil extraction is technological lag. Economists fear that this could lead to Kazakhstan being considered a third-world country once our resources are depleted. According to last year’s data, up to 40% of the oil extracted in Kazakhstan is already owned by Chinese companies. Despite the proportional decrease of China’s presence in Kazakhstan’s oil and gas industry in recent years, experts still fear the growth of its influence in our country’s energy sector.
The Kazakhstan-China oil pipeline (Atasu-Alashankou) is the first direct oil import pipeline allowing the import of oil from Central Asia. It runs from the Kazakhstan Caspian coast to Xinjiang in China, owned by the China National Petroleum Corporation (CNPC) and the Kazakh oil company «KazMunayGas.» Additionally, oil is also delivered from other countries, explaining that China, after the USA, is the world’s second-largest consumer of this resource. Perhaps partly for this reason, in September 2022, Chinese President Xi Jinping stated:
«Regardless of changes in the international situation, we will continue to firmly support Kazakhstan in defending its independence, sovereignty, and territorial integrity, categorically opposing any interference by external forces in your country’s internal affairs.»
Over 26 years of cooperation with China in the oil and other sectors of our economy, our country has received tens of billions of investments. Our enterprising neighbors are unlikely to want to lose them.
However, as some experts reassure, as long as resources are fairly distributed among companies from different countries, there will be no threats to Kazakhstan from its partners.
