ASTANA, KAZAKHSTAN (28 August 2018)- Kazakhstan's future growth depends on reforms that provide a level playing field for the private sector and support economic diversification, according to a new Asian Development Bank (ADB) Country Diagnostic Study launched today.
The study, Kazakhstan: Accelerating Economic Diversification, identifies the most binding constraints to growth and provides in-depth analysis of structural reforms that will bring the country to its growth potential. The report finds that consistent and successful reform efforts can add an average of 1.2 percentage points per year to Kazakhstan's gross domestic product.
"Kazakhstan needs to accelerate structural reforms to support the country's economic diversification," said ADB Country Director for Kazakhstan Mr. Giovanni Capannelli. "These reforms include improving the country's business climate, enhancing competitiveness, and increasing private sector participation in the economy."
Kazakhstan's economy has transformed since its independence in 1991, mainly due to a surge in oil and gas exports. While the country achieved middle-income status in 2006, the downturn of oil and other commodity prices in 2014 exposed the country's vulnerability to external shocks and constrained government revenues.
Future growth will depend on identifying sectors in which Kazakhstan has a strong growth potential, according to the study. These include food processing, basic metals, and chemicals. In agriculture, redirecting subsidies toward investment in infrastructure, improving access to finance, and promoting innovation can substantially boost productivity. Greater investment in infrastructure is essential to provide a link to unexploited markets, decrease transport costs, and support the production of tradable goods. Transit trade has a large growth potential, while increasing the efficiency of transport infrastructure can generate additional growth from other tradable sectors such as manufacturing, the report said.
ADB began supporting Kazakhstan in 1994 and has since approved over $5 billion in sovereign loans, nonsovereign loans, and guarantees. ADB operations in Kazakhstan are helping open up transport routes, foster private enterprise, address inequalities, promote inclusive growth, and deliver knowledge products and services. ADB also contributes to Kazakhstan's participation in the Central Asia Regional Economic Cooperation (CAREC) program.
ADB is committed to achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacific, while sustaining its efforts to eradicate extreme poverty. Established in 1966, it is owned by 67 members-48 from the region. In 2017, ADB operations totaled $32.2 billion, including $11.9 billion in cofinancing.