ECONOMY
Kazakhstan's economy grew by 8.5% in 2007. Gross domestic product (GDP) grew 10.7% in 2006, 9.7% in 2005, 9.6% in 2004, 9.2% in 2003, and 9.5% in 2002.
Kazakhstan's monetary policy has been largely well managed. However, in 2007, rapid increases in global commodity prices helped push inflation rates as high as 18.8%. Prior to this, inflation had remained relatively steady at 9.5%, up from 8.4% in 2006. Inflation from 2002-2004 was 6.6%, 6.8%, and 6.7%, respectively. Because of its strong macroeconomic performance and financial health, Kazakhstan became the first former Soviet republic to repay all of its debt to the International Monetary Fund (IMF) in 2000, 7 years ahead of schedule. In March 2002, the U.S. Department of Commerce graduated Kazakhstan to market economy status under U.S. trade law. The change in status recognized substantive market economy reforms in the areas of currency convertibility, wage rate determination, openness to foreign investment, and government control over the means of production and allocation of resources.
In September 2002, Kazakhstan became the first country in the former Soviet Union to receive an investment-grade credit rating from a major international credit rating agency. Estimated level of external debt in 2006 was $73.46 billion. In 2005, Kazakhstan's gross foreign debt was about $43.40 billion. Kazakhstan has been successful in reducing the ratio of government debt to GDP in recent years. In 2007, total governmental debt was $5.7 billion, which amounts to 5.5% of GDP. In 2000, total government debt equaled 21.7% of GDP. While government debt has continued to decrease, several years of aggressive private-sector borrowing and lending practices contributed to a liquidity and credit crunch in 2007. Total external debt (public and private) increased dramatically from $73.46 billion (2006) to $96.37 billion (2007), now equivalent to 94.4% of GDP. An upturn in economic growth, combined with the results of earlier tax and financial sector reforms, dramatically improved government finances from the 1999 budget deficit level of 3.5% of GDP to a deficit of 0.5% of GDP in 2005. However, the budget deficit level in 2007 was $1.8 billion, or approximately 1.7% of GDP. Government revenues grew from 19.8% of GDP in 1999 to 22.6% of GDP in 2001 to 25.7% of GDP in 2005. Government revenues in 2007, like other sectors of the economy, declined slightly to 22.7% of GDP. In 2000, Kazakhstan adopted a new tax code in an effort to consolidate these gains. On November 29, 2003 the Law on Changes to Tax Code was adopted, which reduced the value added tax (from 16% to 13%), the social tax (from 21% to 13%), and the personal income tax (from 20% to 10%). Kazakhstan furthered its reforms by adopting a new land code on June 20, 2003 and a customs code on April 5, 2003. Further revisions to the customs code are expected to be adopted in 2008.
Oil and gas is the leading economic sector. Production of oil and gas condensate in Kazakhstan amounted to 67.2 million tons in 2007, an increase from 64.5 million tons in 2006. Kazakhstan exported 60.2 million tons of oil and gas condensate in 2007. Natural gas production in Kazakhstan in 2007 amounted to 16.6 billion cubic meters. Kazakhstan holds about 4 billion tons of proven recoverable oil reserves and 3 trillion cubic meters of gas. Industry analysts believe that planned expansion of oil production, coupled with the development of new fields, will enable the country to produce as much as 3 million barrels per day by 2015, lifting Kazakhstan into the ranks of the world's top 10 oil-producing nations. Kazakhstan's 2005 oil exports were valued at $17.4 billion, representing over 70% of overall exports. Major oil and gas fields and their recoverable oil reserves are Tengiz (7 billion barrels); Karachaganak (8 billion barrels and 1,350 billion cubic meters of natural gas); and Kashagan (7-9 billion barrels). Starting in 2004, the Government of Kazakhstan increased its take of oil deals by increasing taxation of new oil projects. In 2007, the government amended the "Law on Subsoil and Subsoil Use." The amendments give the government the right to annul or amend subsoil contracts if the contracts pose a danger to the country's national economic security interests. The government insisted it would not use the amendments retroactively to annul existing contracts.
Kazakhstan instituted an ambitious pension reform program in 1998. There are 14 saving pension funds, one of which is state controlled. The National Bank oversees and regulates the pension funds. The pension funds' growing demand for quality investment outlets triggered rapid development of the debt securities market. Pension fund capital is being invested almost exclusively in corporate and government bonds, including Government of Kazakhstan Eurobonds. The Kazakhstani banking system is developing rapidly. Its capitalization now exceeds $1 billion. The National Bank has introduced deposit insurance in its campaign to strengthen the banking sector. Several major foreign banks have branches in Kazakhstan, including ABN-AMRO, Citibank, and HSBC.
Agriculture
Agriculture accounted for 5.82% of Kazakhstan's GDP in 2007. Grain (Kazakhstan is the seventh-largest producer of wheat in the world) and livestock are the most important agricultural commodities. Agricultural land occupies more than 220 million hectares, about 68% of which consists of pasture and hay land. Chief livestock products are dairy goods, leather, meat, and wool. The country's major crops include wheat, barley, cotton, and rice. Wheat is the leading agricultural commodity in Kazakhstan's export trade. Kazakhstan harvests 14-15 million tons of wheat per year.
Natural
Resources
Oil, gas, and mineral exports are key to Kazakhstan's economic success. Since 1993, Kazakhstan's extractive industries have attracted $30.7 billion in foreign investment, which represents almost 76% of the total foreign direct investment in Kazakhstan for that period. Kazakhstan has significant deposits of coal, iron ore, copper, zinc, uranium, and gold.
GDP (2007): $102.5 billion.
Exchange rate (period average): 122.55 KZT/U.S. $1 in 2007.
GDP growth rate: 9.5% (2002); 9.2% (2003); 9.6% (2004 est.); 9.7% (2005 est.); 10.7% (2006); 8.5% (2007).
GDP per capita (2007, purchasing power parity): $11,100.
Inflation rate: 6.6% (2002); 6.8% (2003); 6.7% (2004 est.); 7.5% (2005); 8.4% (2006); 18.8% (2007 year-over-year); 10.8% (2007 average).
Trade: Exports (2007 est.)--$44.88 billion. Imports (2007 est.)--$29.91 billion.
Gross external debt: $18.2 billion (2002); $22.9 billion (2003); $32.71 billion (2004); $43.40 billion (2005); $73.46 billion (2006); $96.37 billion (2007).
Central Bank's foreign exchange reserves: $4.96 billion (2003); $7.07 billion (2005 est.); $19.04 billion (Feb. 2008).
National (oil) fund reserves: $3.6 billion (2003); $5.1 billion (2004); $10.1 billion (2006); $22.6 billion (Feb. 2008).
Officially recognized unemployment rate: 8.7% (2003); 8.4% (2004 est.); 8.1% (2005 est.); 7.4% (2006 est.); 7.1% (2007 est.).
Population below poverty line: 13.8% (2007).
