PSCRP-BESA Reports No 240 (October 19, 2026)
Part I. Macroeconomic Achievements and Household Welfare
The analysis below examines statistical data on contemporary Kazakhstan, focusing on interconnected changes in the economy, social structure, and demographic profile. Much of the statistical evidence used here comes from materials presented at the National Think Tank Forum on August 21, 2026. The forum brought together representatives of four major state-affiliated policy research institutions in Kazakhstan, specializing respectively in social development (Kazakhstan Institute for Public Development), economic policy (Economic Research Institute), industrial policy (QazIndustry), and education (A. Baitursynuly National Center for Education Research and Evaluation “Taldau”). Together, these institutions constitute an important part of Kazakhstan’s state policy research and analytical infrastructure.
The materials discussed at the forum offer invaluable insight into how government-affiliated experts assess Kazakhstan’s current socioeconomic situation and, more broadly, how they understand the ongoing transformation of Kazakhstani society.
At the same time, it should be noted that the official experts did not address some important issues—for example, the reasons why many households continue to experience economic difficulties despite the country’s relatively strong macroeconomic performance. Where such issues arise, the analysis below draws on data from open sources, with appropriate references provided. The text as a whole, however, represents solely the author’s own reflections and interpretations of the relationship between economic change, demographic transformation, and broader social trends in contemporary Kazakhstan.
I. Kazakhstan Today: Economic Growth as Part of a Broader Structural Transformation
All economic and demographic statistics in this text, except where otherwise indicated by a specific link, are based on data and analysis provided by two government think tanks, the Economic Research Institute and QazIndustry. These data draw both on widely available national and international statistics and on statistical information collected independently by the two institutions. Kazakhstan remains the largest economy in Central Asia. In 2025, the country’s GDP amounted to approximately $306.8 billion. According to the World Bank, Kazakhstan’s nominal GDP per capita stood at around $14,692, compared with an average of approximately $6,500 for the five Central Asian states (including Kazakhstan itself) combined. Kazakhstan’s figure was therefore about 2.26 times the regional average. By comparison, GDP per capita was approximately $6,540 in Turkmenistan, $3,968 in Uzbekistan, $3,081 in Kyrgyzstan, and $1,637 in Tajikistan. Among the former Soviet republics, excluding the Baltic states and Russia, Kazakhstan also ranked first by this indicator. In 2025, nominal GDP per capita stood at approximately $9,692 in Georgia, $9,474 in Armenia, and $7,411 in Azerbaijan.
According to World Bank data for 2025, Russia’s nominal GDP per capita remains higher, at $17,547. However, over the past two decades, Kazakhstan has substantially narrowed its income gap with Russia. For a longer-term comparison, however, purchasing power parity (PPP) provides a more meaningful measure. In 2005, Kazakhstan’s GDP per capita at PPP was only about 73 percent of Russia’s; by 2025, it had reached almost 90 percent. Convergence in nominal dollar terms has been considerably more volatile, reflecting fluctuations in oil prices as well as movements in the exchange rates of both the tenge and the ruble.
Indeed, in terms of GDP per capita at purchasing power parity, Kazakhstan can increasingly be compared not simply with other post-Soviet economies but with a broader group encompassing Russia and the countries of Central and Eastern Europe. In 2025, Kazakhstan’s GDP per capita at PPP was approximately $45,310, compared with $57,818 in Lithuania, $54,300 in Poland, $50,255 in Russia, $49,492 in Estonia, and $48,724 in Romania. This does not, of course, mean that institutions, household incomes or living standards are identical, but it does indicate how far Kazakhstan has moved in terms of overall economic output per capita.
From a macroeconomic perspective, it is also important that Kazakhstan, following the example of a number of other major oil-producing states, has succeeded in accumulating substantial financial reserves. At the end of 2025, the National Fund of the Republic of Kazakhstan — the country’s sovereign wealth fund, financed largely from oil-sector revenues — held assets of approximately $73.8 billion. Separately, the National Bank of Kazakhstan held official international reserves of about $65.4 billion, a record level and roughly $19.6 billion higher than a year earlier. Taken together, these two pools of financial assets amounted to approximately $139 billion, providing Kazakhstan with a substantial macroeconomic buffer against external shocks and fluctuations in hydrocarbon revenues. The IMF’s latest published assessment puts gross public debt at about 25% of GDP in 2025. Kazakhstan’s total external debt is much larger (around 58–60% of GDP) but that figure includes private-sector and intercompany liabilities, especially financing connected with large oil and gas projects. Once the government’s financial assets are taken into account, Kazakhstan’s net public debt is very low.
Foreign investment has played a major role in Kazakhstan’s economic success, helping, among other things, to build a large modern oil industry largely from the ground up after the collapse of the Soviet Union. According to UNCTAD data, by 2025 the cumulative volume of net FDI attracted since independence had exceeded $151 billion. The contrast with the other Central Asian states is striking: the corresponding cumulative figures were approximately $44 billion for Turkmenistan, $16 billion for Uzbekistan, and around $4 billion each for Tajikistan and Kyrgyzstan. Another measure—the cumulative gross inflow of FDI, which does not deduct subsequent capital withdrawals and other reverse flows—exceeded $470 billion. Measured in per capita terms, Kazakhstan’s accumulated inward FDI stock is exceptionally high by post-Soviet standards, surpassed only by the Baltic states. Although net FDI weakened sharply in 2024–2025, gross inflows recovered to approximately $20.5 billion in 2025, suggesting that Kazakhstan continues to retain a strong position as Central Asia’s principal destination for foreign investment.
Since 2022, however, both Kazakhstan’s hydrocarbon revenues and foreign-capital inflows have become considerably more volatile. Geopolitical crises can generate windfall gains by pushing oil prices upward while simultaneously threatening the Russian and Black Sea transit infrastructure on which much of Kazakhstan’s oil exports still depend. Foreign investment has displayed similar instability: the exceptionally high gross FDI inflow of about $28 billion in 2022 subsequently declined, while geopolitical risk has increasingly shaped both the volume and composition of incoming capital. At the same time, Western sanctions against Russia generated an unusual countervailing effect, redirecting businesses, capital, and commercial activity toward Kazakhstan, whose membership in the Eurasian Economic Union made it a particularly convenient location for firms seeking to preserve links with the Russian market.
The relative competitiveness of Kazakhstan’s economic model is also confirmed by international comparative assessments. In the 2026 IMD World Competitiveness Ranking, Kazakhstan ranked 38th among 70 economies, ahead of several EU members, including Spain, Portugal, Poland and Italy. Particularly noteworthy were its rankings for Government Efficiency and Business Efficiency, in both of which Kazakhstan placed 23rd. The country also ranked sixth in terms of real GDP growth. At the same time, the ranking highlights important structural weaknesses: Kazakhstan placed only 43rd in infrastructure and 57th in overall economic performance, while high inflation remained a particularly serious constraint. The IMD results therefore reinforce the picture of a rapidly growing and relatively business-friendly economy whose institutional and entrepreneurial development is advancing faster than some elements of its physical infrastructure and macroeconomic stabilization.
The absolute size of the economy, however, is only a starting point. More important is the fact that Kazakhstan is currently undergoing several processes of structural transformation simultaneously. On the one hand, the traditional resource base of the economy remains highly important, particularly oil and gas, uranium, metals, and other natural resources. On the other hand, manufacturing, investment, small and medium-sized businesses, transportation, construction, and the digital economy are all expanding. Contemporary Kazakhstan therefore cannot adequately be described simply as a “resource-based economy”, but neither can it yet be characterized as a fully industrial or post-industrial economy. It is more useful to think of Kazakhstan as an economy in transition toward a more complex and diversified economic structure.
In 2025, Kazakhstan’s real GDP grew by approximately 6.5 percent. Forecasts for 2026 vary among institutions, but most fall within a range of roughly 4.5–5.5 percent. One of the factors underpinning this growth has been the rapid expansion of investment. Total investment amounted to approximately KZT 13.2 trillion in 2021, KZT 15.2 trillion in 2022, KZT 17.6 trillion in 2023, KZT 19.5 trillion in 2024, and KZT 23.5 trillion in 2025. Thus, in just four years, nominal investment increased by approximately 78 percent. Importantly, this expansion cannot be attributed solely to inflation. The physical volume index of investment reached approximately 116.7 percent in 2025, indicating substantial growth in investment activity in real terms as well. Its sectoral composition is particularly revealing. In 2025, investment in agriculture increased by approximately 51.8 percent, investment in manufacturing by 39 percent, wholesale trade by 15.4 percent, and transportation by approximately 12.3 percent.
This suggests an important broader conclusion. Kazakhstan is not simply increasing the overall volume of capital investment; the sectoral base of investment is gradually broadening. Capital is increasingly flowing not only into the traditional extractive industries but also into manufacturing, agriculture, transportation infrastructure, and trade. Over time, it is precisely this redistribution of investment across sectors that has the potential to alter the underlying structure of the economy.
The composition of investment financing is also noteworthy. Of the total investment recorded in 2025, approximately KZT 18.4 trillion came from private sources, while around KZT 5.1 trillion was financed from the state budget. In other words, roughly four-fifths of total investment was financed from non-budgetary sources. This is significant because it suggests that the current investment expansion cannot be understood simply as a state-driven stimulus: a substantial share is being generated within the broader private and corporate economy.
II. From a Resource-Based Economy to a More Complex Resource-Industrial Model
One of the most visible developments of recent years has been the rapid expansion of Kazakhstan’s manufacturing sector. Manufacturing output increased from KZT 17.1 trillion in 2021 to KZT 21.2 trillion in 2022, KZT 22.0 trillion in 2023, KZT 25.1 trillion in 2024, and KZT 30.7 trillion in 2025. Thus, over just four years, the nominal value of manufacturing output increased by approximately 79.5 percent. The acceleration between 2024 and 2025 was particularly notable, with output rising from KZT 25.1 trillion to KZT 30.7 trillion.
The same trend can be observed in foreign trade. The share of manufactured products in total exports evolved as follows: 33.0 percent in 2021, 31.7 percent in 2022, 32.5 percent in 2023, 35.3 percent in 2024, and 36.4 percent in 2025. After a temporary decline in 2022, a clear upward trend emerged. Compared with the 2022 low, the share of manufactured goods in Kazakhstan’s exports increased by almost five percentage points. The value of manufacturing exports increased from approximately $19.8 billion to $28.8 billion, an increase of roughly 45 percent. It is here that one can begin to speak of genuine economic diversification. Kazakhstan’s export basket is gradually becoming more complex. Alongside traditional raw-material exports, metallurgical products, chemicals, machinery and equipment, construction materials, and more highly processed products are assuming a greater role.
At the same time, a more complex export structure does not mean that Kazakhstan has already overcome its dependence on natural resources. Metallurgy alone accounts for approximately 40.4 percent of manufacturing output. Major manufactured exports also include ferroalloys, processed uranium products, silver, zinc, and other goods closely linked to the processing of the country’s natural-resource base. So, the country still combines elements of a resource-based economy with those of an industrial model.
At the same time, Kazakhstan is already having to confront challenges normally associated with post-industrial transformation: digitalization, the adoption of artificial intelligence, the development of a knowledge-based economy, and the reform of its education system. This is one of the defining features of Kazakhstan’s current transformation. Western economies largely encountered these challenges sequentially: industrialization came first, followed by the transition toward a post-industrial economy. Kazakhstan, by contrast, is being forced to address both transformations simultaneously — deepening its industrial base while at the same time building the institutions, skills, and technologies required for a post-industrial economy.
III. Economic Pressures at the Household Level
Rapid macroeconomic growth contributes to rising prosperity across society, but it should not automatically be equated with a comparable improvement in the living standards of every household at any given moment. This is one of the most visible internal imbalances of Kazakhstan’s modernization. In fact, similar tensions have accompanied modernization processes of nearly all countries in the past, often generating social discontent as a side effect of rapid economic and structural change. In my view, this contradiction is highly relevant to understanding public attitudes in Kazakhstan. It is therefore important for experts and policymakers to explain this apparent paradox to the public — something that, unfortunately, from my point of view, has not yet been done sufficiently effectively.
As a result, there is often a lack of understanding at the societal level as to why, despite rising GDP, investment, and industrial production, a significant proportion of families continue to operate with very limited disposable budgets. This is particularly striking given Kazakhstan’s comparatively moderate official measures of income inequality. In 2025, the Gini coefficient stood at 0.291, while the incomes of the richest 10 percent of the population were approximately six times those of the poorest 10 percent. This represents a relatively moderate level of measured income inequality by international standards. Yet household consumption patterns point to the continuing material vulnerability of a part of the population.
According to Kazakhstan’s Bureau of National Statistics, food accounted for 52.3 percent of total household cash expenditure in 2025. In some regions, the figure was even higher—for example, 57.3 percent in Almaty Region and 55.6 percent in Abai Region. Such a pattern indicates that, for a substantial share of the population, basic consumption continues to absorb a very large proportion of the household budget. Poverty also remains a persistent problem. In 2025, 5 percent of the population had incomes below the official subsistence minimum. What explains this apparent discrepancy between strong macroeconomic performance and continuing financial pressure on many households?
- The resource-intensive structure of the economy. A high level of GDP does not automatically translate into equally broad-based household labor income. Oil and gas, mining, and metallurgy can generate enormous value added and export revenues without employing a proportionately large share of the labor force. GDP can therefore grow rapidly while the income of an ordinary household increases much more slowly.
- The gap between average and typical wages. The social consequences of Kazakhstan’s economic structure are particularly visible in wage statistics. In 2025, the average monthly wage was approximately KZT 443,000, while the median wage was only KZT 318,000. The most frequently observed, or modal, wage was considerably lower still, at approximately KZT 116,000. The large gap between these indicators is important: the average wage provides a much more favorable picture than the income actually received by a large proportion of employees.
- High food-price inflation. In recent years, inflation has significantly eroded household purchasing power. To some extent, inflationary pressures are transmitted from neighboring Russia through the closely integrated markets of the two countries. More broadly, Kazakhstan’s integration into the Eurasian Economic Union has increased the extent to which domestic prices are affected by economic and price developments elsewhere in the common market.
In 2025, the average nominal wage increased by 9.3 percent, but fell by 1.8 percent in real terms. The median wage was stagnant in real terms, increasing by only 0.4 percent. The composition of inflation is even more important. Overall inflation reached 12.3 percent in 2025, while food prices rose by 13.5 percent. Prices for some products that are particularly important to ordinary households increased much faster: beef by 32.1 percent, lamb by 28.8 percent, and sunflower oil by 17.5 percent. When households already devote a large proportion of their budgets to food, food-price inflation affects them more severely than the headline inflation rate suggests. This creates a kind of vicious circle: low and middle incomes produce a high food share in household expenditure, while rapidly rising food prices leave even less money available for housing, education, leisure, savings, and other forms of consumption.
- Household size and children. Earnings often have to support a relatively large number of dependents. Poverty has increasingly become concentrated among children and larger families: children account for approximately 40 percent of the poor. A household with two working adults and three or four children may appear relatively secure when measured by the wages of the two earners. Once those resources are divided among five or six family members, however, per capita household income becomes substantially lower. Food is also one of the few major categories of expenditure that cannot easily be reduced. Kazakhstan’s relatively high fertility and comparatively large households therefore help explain both the persistence of material vulnerability and the unusually high share of food in household expenditure.
- Large territorial disparities. The World Bank has estimated the poverty rate at 11.4 percent in rural areas, compared with 6.6 percent in urban areas, with poverty particularly concentrated in certain parts of the country, including Turkistan Region. More broadly, the highly uneven territorial distribution of economic prosperity remains another challenge to Kazakhstan’s modernization. The highest household incomes are concentrated in the two largest cities, Almaty and Astana, as well as in several oil-producing and industrial regions. In the first quarter of 2026, nominal per capita cash income amounted to approximately KZT 408,000 in Almaty and KZT 353,000 in Astana, compared with only KZT 143,000 in Turkistan Region, KZT 161,000 in Shymkent, and KZT 167,000 in Zhambyl Region. The gap between the highest- and lowest-income regions therefore approaches a factor of three. Territorial disparities in economic output are even larger. In 2025, GRP per capita in oil-producing Atyrau Region was approximately KZT 23.3 million, compared with only KZT 2.5 million in Turkistan Region — a difference of more than ninefold. Moreover, a region’s resource wealth does not translate fully into household income, as is particularly evident in Kazakhstan’s oil- and gas-producing regions.
- Housing costs and household debt. In 2025, an additional 6.5 percent of household cash expenditure, on average, went toward the repayment of loans and other debts. Debt servicing therefore further reduces the disposable resources available to households. High indebtedness among certain population groups has not only economic but also cultural and behavioral dimensions. These extend beyond obvious forms of socially destructive spending and include the importance attached to status consumption among lower-income households, such as expensive family celebrations or the purchase of costly cars despite limited disposable income. Such expenditure patterns can further intensify household financial vulnerability.
Against the background of these pressures on ordinary households, it becomes easier to understand why, under President Tokayev, Kazakhstan has moved toward a considerably more socially redistributive model, which can also be viewed as one dimension of the country’s broader social liberalization. Rapid increases in pensions, benefits, public-sector remuneration, and spending on education, health care, and regional infrastructure have substantially increased the state’s recurrent obligations. In 2023, approximately KZT 4.69 trillion from the republican budget was allocated to pensions and social benefits alone. In 2024, expenditure within the social and labor policy block increased to approximately KZT 5.46 trillion, an increase of 16.3 percent. For 2025, it rose further to approximately KZT 6.11 trillion, another increase of around 14 percent.
With ordinary budget revenues insufficient to finance the expanding expenditure envelope, the government has continued to rely heavily on transfers from the oil-financed National Fund. This does not yet amount to a depletion of Kazakhstan’s reserves (the Fund’s assets actually increased in 2024–2025) but it does indicate an important transformation in their function. Accumulated hydrocarbon wealth is increasingly being used not only as a long-term savings mechanism, but also as an instrument of social stabilization, helping the state manage the distributional pressures generated by Kazakhstan’s rapid economic and demographic transformation.
IV. The Growth of Small and Medium-Sized Enterprises as an Indicator of Changing Economic and Social Structure
The second major process, alongside rapid economic growth, is the changing role of small and medium-sized enterprises (SMEs). This sector plays an important role in mitigating some of the social problems discussed above. Whereas a large resource-based economy tends to be organized around a relatively small number of giant corporations, a more diversified economy inevitably involves a growing number of independent economic actors.
SME statistics reveal a remarkably consistent trend. The share of gross value added generated by SMEs in GDP increased from 33.5 percent in 2021 to 35.1 percent in 2022, 36.9 percent in 2023, 38.9 percent in 2024, and 40.9 percent in 2025. Over just four years, this represents an increase of 7.4 percentage points.
Particularly important is the absence of abrupt fluctuations. The increase has been almost linear, suggesting that this is not simply a temporary cyclical phenomenon but a more durable structural shift. SMEs now generate approximately two-fifths of Kazakhstan’s GDP. The employment figures are even more striking. Around 4.53 million people work in the SME sector, representing approximately 46–47 percent of total employment. In other words, almost every second employed person in Kazakhstan is now economically connected not to a large state-owned or resource corporation, but to a small or medium-sized business.
The significance of this development extends far beyond economics. SMEs contribute to the emergence of a different kind of social structure. An employee of a large industrial enterprise, a government institution, or a state-owned corporation is generally more deeply embedded in a large organizational hierarchy. An entrepreneur, small-business owner, self-employed professional, or employee of a small private company operates within a somewhat different system of relationships. Such individuals are more directly exposed to market conditions, more dependent on the quality of urban infrastructure, more interested in predictable regulation, more sensitive to taxation and administrative barriers, more reliant on digital services and the banking system, and more likely to value mobility and education. The expansion of SMEs is therefore gradually producing not only a different economy, but also a different type of citizen.
The sectoral composition of SMEs is also revealing. Wholesale and retail trade, including motor-vehicle repair, remains the largest sector, accounting for approximately 27 percent of SME output and more than 30 percent of SME employment. Other sectors, however, have also become significant: construction accounts for approximately 15.8 percent of output, manufacturing for 12.6 percent, transportation and storage for around 7 percent, and agriculture for approximately 6.2 percent. These figures suggest a gradual diversification of small and medium-sized business beyond simple retail and commerce.
The relationship between output and employment also differs considerably across sectors. In construction, the share of SME output is substantially higher than the sector’s share of SME employment — approximately 15.8 percent versus 7.5 percent. A similar pattern can be observed in manufacturing, at 12.6 percent versus approximately 8.5 percent. Agriculture displays the opposite relationship: its share of employment, approximately 9.7 percent, is significantly higher than its 6.2 percent share of SME output. These differences provide an indication of substantial variations in labor productivity across different segments of the SME economy.
It is particularly interesting that Kazakhstan’s relatively more liberal economic model has been associated with a substantially larger role for SMEs than in neighboring Russia. Between 2015 and 2025, the SME contribution to Kazakhstan’s GDP increased from 24.9 percent to 40.9 percent. SMEs have thus become one of the country’s principal engines of economic growth, alongside foreign investment.
The trajectory in neighboring Russia has been markedly different. Even before the war, the SME sector generally accounted for only around 20–22 percent of GDP, reflecting, among other factors, the considerable expansion since the 2000s of large corporations closely connected to the state. Kazakhstan has followed a different path. Alongside its success in attracting foreign capital, the rapid expansion of small and medium-sized business has become one of the distinguishing features of Kazakhstan’s economic model relative to Russia and a number of other post-Soviet states. As will be discussed in the next section, these economic differences have increasingly important implications for the structure of Kazakhstani society itself.
Overall, Kazakhstan’s economy is demonstrating not only high quantitative rates of growth but also significant qualitative structural transformation. This transformation has been facilitated by a relatively liberal and open economic system, with foreign investment and the rapid expansion of SMEs emerging as two of its principal drivers. At the same time, as has been the case with virtually every major process of economic modernization, the benefits of transformation are distributed unevenly across sectors, regions, social groups, and households.