Kazakhstan Business & Economy - The Times Of Central Asia

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Middle Corridor

Middle Corridor Must Cut Delays, TITR Chief Tells TCA

The Middle Corridor has spent the past several years attracting freight away from longer or politically sensitive routes between Asia and Europe. Now its operators must make it function as a single, reliable corridor. “Reducing transit time is achieved not through a single solution, but through the consistent modernization of all key links along the route, from ports and terminals to railway infrastructure and digital tools,” Nurgul Zhakupova, Secretary General of the International Association “Trans-Caspian International Transport Route,” told The Times of Central Asia. [caption id="attachment_54935" align="aligncenter" width="1774"] Nurgul Zhakupova, Secretary General of TITR. Image courtesy of the subject[/caption] Known internationally as the Middle Corridor, the Trans-Caspian International Transport Route (TITR) connects China with Europe through Kazakhstan, the Caspian Sea, Azerbaijan, and Georgia, with onward connections through Turkey. Freight traffic has risen sharply since Russia’s invasion of Ukraine increased demand for routes bypassing Russia. According to official figures, container traffic grew by 36% in 2025 to around 77,000 TEUs, although total freight volume slipped to about 4.12 million tons from 4.48 million tons in 2024. The World Bank estimates that freight volumes along the Middle Corridor could triple and transit times could be halved by 2030 if the necessary investments and reforms are made. The European Union and international financial institutions have meanwhile committed to mobilizing €10 billion for sustainable transport connectivity in Central Asia, with the aim of developing a route capable of linking Central Asia and Europe in around 15 days. For Zhakupova, that means tackling bottlenecks across several countries at the same time. Building a faster railway in Kazakhstan achieves little if cargo then waits for a ship on the Caspian, becomes stuck at a border, or encounters another congested section farther west. [caption id="attachment_54945" align="aligncenter" width="1535"] Infographic: TCA[/caption] Infrastructure Races to Catch Up One immediate challenge is expanding infrastructure fast enough to accommodate container traffic and anticipated future freight growth. Kazakhstan launched the second Dostyk-Moyynty railway line and the Almaty bypass in 2025. Construction of the Moyynty-Kyzylzhar line and modernization of other sections are continuing. The Dostyk-Moyynty project alone stretches 836 kilometers and is expected to substantially increase rail capacity on the China-Kazakhstan axis. One of the Middle Corridor’s most difficult bottlenecks is not on land, but on the Caspian Sea. Growing traffic requires more vessels, while falling water levels and adverse weather complicate port and shipping operations. KTZ Express plans to acquire six multipurpose dry cargo container vessels: four are to be built by China’s Jiangsu Haizhongzhou Shipping Industry and two by the Baku Shipyard. Kazmortransflot is building two container vessels in partnership with Abu Dhabi Ports Group, while Azerbaijan is also considering expanding its fleet with ferries and roll-on/roll-off vessels for wheeled cargo. “Additional limiting factors remain the falling level of the Caspian Sea and adverse weather conditions. In this regard, a range of measures is also being implemented at the ports of Aktau, Baku, and Kuryk to minimize the impact of these factors on the stability of transportation,” Zhakupova told TCA. In Kuryk,...

GDP Forecast

Kazakhstan Forecasts GDP Growth Above 5% in 2027–2029

Kazakhstan’s government has approved a socioeconomic development forecast and draft republican budget for 2027–2029, projecting average annual real GDP growth above 5% as manufacturing, agriculture, construction, transport, and other non-oil sectors expand. The forecast was prepared with reference to the global economic outlook and conditions in external markets. The accompanying draft budget, approved at the same government meeting chaired by Prime Minister Olzhas Bektenov, will be submitted to the Kurultai for consideration. Under the government’s baseline scenario, real GDP is projected to grow by 5.3% in 2027, 5.5% in 2028, and 5.4% in 2029. Nominal GDP is expected to rise from KZT 199.3 trillion in 2027 to KZT 245 trillion in 2029, an increase of almost 23%. Non-oil sectors are expected to provide the main impetus for expansion. Manufacturing output is forecast to grow by an average of 5.9% a year, substantially faster than the 2% projected for mining. Metallurgy, mechanical engineering, construction materials, chemicals, and food production are expected to make the largest contributions. Oil exports and the broader mining sector will remain central to the economy and public finances, but the forecast assumes that manufacturing and other non-oil activities will account for a larger share of new output. TCA reported in July that Kazakhstan’s economy expanded by 4.1% in the first half of 2026 despite an 8.4% decline in oil production. The non-oil economy grew by more than 5%, with manufacturing, construction, trade, and transport accounting for more than 80% of overall growth. Manufacturing output increased by 9.8%. Agriculture is expected to expand by at least 5% annually. Construction is projected to remain among the fastest-growing sectors, increasing by 16% in 2027 and 17.3% in 2029. Deputy Prime Minister and Minister of National Economy Serik Zhumangarin said the expansion would be supported by transport and logistics, energy, and water projects, together with the modernization of housing, utilities, and social infrastructure. The services sector is also expected to maintain strong momentum. Trade is forecast to expand by an average of 5.7% annually, information and communications by 9.2%, and transport and warehousing by 10.4%. The transport forecast builds on rapid expansion along the Trans-Caspian International Transport Route, or Middle Corridor. Annual freight volumes through Kazakhstan have risen from 0.8 million to 4.5 million tons over seven years, while delivery times fell from approximately 28–32 days to 13–17 days. The route still carries substantially less cargo than established northern corridors, and participating countries continue to work on remaining bottlenecks. Infrastructure spending is a central element of the draft budget, but Bektenov said it must be accompanied by stronger financial discipline. Under President Kassym-Jomart Tokayev’s instructions, accelerated construction of infrastructure and social facilities has been designated as a principal budget priority. Government bodies were told to meet the approved economic targets, while administrators of budget programs were directed to increase the return on every tenge spent. The headline budget deficit is forecast to fall from 2.3% of GDP in 2027 to just 0.4% in 2029. However, the non-oil deficit, which measures the...

AIFC TCA Interviews

AIFC Interview: Central Asia Investment, Middle Corridor and ESG

The Astana International Financial Centre (AIFC) positions itself as a platform for international investment in Kazakhstan and across Central Asia. In an interview with The Times of Central Asia, Zhanbolat Kakishev, Chief Product Officer at the AIFC Authority, discussed competition for investment, financing for the Middle Corridor, investor protection, ESG, and currency risks. Kakishev said the AIFC ecosystem has attracted $26.3 billion in investment to Kazakhstan and registered more than 6,000 companies from 90 countries. TCA: How does the AIFC assess the current investment climate in Central Asia amid the fragmentation of global markets, and what share of foreign direct investment into the region does the centre aim to attract in the coming years? Zhanbolat Kakishev: We assess Central Asia’s investment climate as resilient and gradually strengthening despite the fragmentation of global markets. Moreover, the restructuring of global supply chains and investors’ search for new sources of growth are creating additional opportunities for the region. International investor interest in Central Asia already rests on a solid foundation. According to UNCTAD, by the end of 2025, the stock of foreign direct investment in the region had reached approximately $235.5 billion, of which $156.4 billion was in Kazakhstan. The region combines a substantial resource base, a growing domestic market, and a strategic position between Europe and Asia. It also has significant investment potential in areas including transport and logistics, energy, critical minerals, digitalisation, and financial services. The AIFC does not set a target in the form of a fixed share of total FDI flowing into Central Asia. Our task today is to continue improving the AIFC ecosystem, its infrastructure, and the conditions that allow international capital to enter Kazakhstan effectively, as well as to participate in regional projects. To date, $26.3 billion in investment has been attracted to Kazakhstan through the AIFC ecosystem. More than 6,000 companies from 90 countries are registered in the Centre’s jurisdiction. For us, however, it is not only the volume of capital attracted that matters, but also its quality — long-term investment that contributes to economic diversification, private-sector development, and the further integration of Kazakhstan and Central Asia into global capital markets. TCA: Given the growing interest in the Middle Corridor, or Trans-Caspian International Transport Route, what investment instruments does the AIFC offer to finance major infrastructure and logistics projects in the region? Zhanbolat Kakishev: The AIFC provides comprehensive legal and financial infrastructure for structuring and attracting financing for major infrastructure and logistics projects, including those along the Middle Corridor. Depending on the structure of a project, special-purpose vehicles or companies (SPVs/SPCs), joint ventures, and investment funds can be used to pool capital from strategic, institutional, and private investors. Through the Astana International Exchange (AIX), projects can also raise debt and equity financing, including through conventional, green, and sustainability bonds, as well as Islamic finance instruments such as sukuk. For large infrastructure projects, the ability to combine different sources of capital is particularly important. These can include financing from international financial institutions and banks, funds from strategic...

Oil Refining

After CPC Disruptions, Kazakhstan Wants to Refine More Oil at Home

Kazakhstan wants to more than double its oil refining capacity and sell more petrol and diesel to neighboring countries. The case for reducing its reliance on crude exports has gained urgency. Disruptions to the Caspian Pipeline Consortium (CPC) this year have already forced the country to cut its 2026 oil production forecast by 2 million tonnes. Kazakhstan produced 99.6 million tonnes of oil in 2025 but refined only 18.4 million tonnes. Energy Minister Yerlan Akkenzhenov said at a briefing on August 25 that refining capacity is planned to increase to 40 million tonnes. “We want to bring this ratio, as in other developed countries that are also producers, to one to two or one to three,” Akkenzhenov said. According to him, Kazakhstan eventually expects to supply neighboring countries with motor fuel and expand its export potential. This does not mean abandoning crude oil exports: even after refining capacity reaches 40 million tonnes, a significant share of production will continue to be exported. Astana is instead seeking to shift the balance toward finished products. The oil refining industry development concept runs through 2040. According to the Energy Ministry, Kazakhstan’s refineries processed 18.4 million tonnes of oil in 2025 and produced 15.47 million tonnes of petroleum products. The concept adopted in 2025 envisaged refining rising to 39.2 million tonnes a year by 2040. The government has since accelerated the timetable, targeting 40 million tonnes of annual capacity by 2033. Average refining depth at the country’s three main refineries reached 90% in 2025 and is targeted to rise to 94%. To achieve this, Kazakhstan is preparing to build a fourth major refinery with capacity of up to 10 million tonnes a year. Possible locations include the Mangystau, Atyrau and Turkestan regions, as well as Ulytau, with the authorities expecting to select a site by the end of the year. The new plant could begin operating by 2033, with the Energy Ministry expecting its launch to fully cover domestic demand for jet fuel and allow Kazakhstan to expand exports of K5-standard petroleum products, broadly equivalent to Europe’s Euro 5 standard. Problems with the Caspian Pipeline Consortium, Kazakhstan’s main route for getting oil to the global market, have strengthened the case for diversifying the way Kazakhstan uses and exports its oil. The pipeline runs through Russia to a Black Sea terminal near Novorossiysk, meaning disruptions there can quickly affect production in Kazakhstan. On August 25, Akkenzhenov said the country’s oil production forecast for 2026 had been cut from 98 million to 96 million tonnes. He estimated production losses resulting from attacks on CPC infrastructure at around 3.5 million tonnes. The authorities are trying to compensate for part of the lost volumes by rescheduling major maintenance at large oil fields. Astana is also looking for additional routes to global markets. Akkenzhenov identified Baku-Supsa, the pipeline running from Azerbaijan to Georgia’s Black Sea coast, as one option, saying it could carry around 5 million tonnes a year. The route has seen only limited use since 2022, although...

Opinion

What Building Central Asian Supply Chains Taught Me About AI

I took over spare-parts supply at BPK Auto in Ust-Kamenogorsk in the mid-2000s, at the age of 25, moving from selling cars. The company was the general dealer for VAZ in Kazakhstan, assembled Niva models in the city, and was taking on Skoda, Chevrolet, and Kia while building service centers across the country to meet the expectations of those brands for a dealer. My job was to keep parts flowing to all of it. Several thousand vehicles came through in a month, and a single car contains something like 50,000 separate part numbers. The service teams wanted as many of those as possible sitting on the shelves. From where they stood, that made sense, because they were judged on whether a mechanic could start a repair the same day, whether a customer complained, and an ISO audit was running over the service operation at the same time. From the procurement side, the arithmetic looked different. Some parts cost two or three thousand dollars and were fitted once or twice a year, and holding them across four model lines tied up a large share of the company's working capital. I built the forecast in spreadsheets and checked it against actual sales once the month closed in 1C. To run it, I needed the service side's own records: how many vehicles of each type they had seen, and what had been repaired. I asked for them for months. They would not release them. Some of that was habit; a warehouse full of everything being what a well-run operation had looked like for the previous 40 years. More of it sat in how the two departments were counted. My result was recorded the moment the parts moved into the service center. Theirs was recorded much later, when the car left the workshop. Nobody was measured by the number that would have made the forecast work. The forecasting was the straightforward part of that job. The difficult part was building an operation in which people shared the information behind the forecast and were expected to act on its findings. Why a Better Model Would Not Have Changed the Outcome Put one of today's AI demand-forecasting systems into that same warehouse and very little changes. The forecast would be far better than anything I produced by hand. It would still depend on service records that nobody was willing to release, and where records did exist, it would be reading entries written up at the end of a long shift. It could not grant the purchasing manager authority to reorder against it, nor could it alter the measures by which the service department was judged. Better intelligence does not repair the path between operational data and operational action. Every party you add to that path lengthens it. A distribution network across Kazakhstan and Kyrgyzstan can run from a manufacturer to over 45,000 small retail outlets, served through more than 18 distribution centers, with 1,391 field staff taking and checking orders on the ground. An order begins...

Fuel Shortages

Kazakh Refinery Plans Fuel Exports to Russia Amid Petrol Shortages

A small refinery in western Kazakhstan is preparing to process Russian crude and send most of the resulting petrol and diesel back to Russia as Moscow struggles with fuel shortages. The arrangement was confirmed on August 25, the same day that separate incidents occurred at two of Kazakhstan’s three major refineries. On August 19, Russian Deputy Prime Minister Alexander Novak said that, given the situation on the fuel market, the government was “keeping its finger on the pulse” and monitoring supplies daily with companies and regional authorities. According to Novak, Russia had already imposed export restrictions and begun importing petroleum products. Several refineries were also expected to return from repairs, increasing domestic supplies. Russia’s Fuel Shortage The pressure on Russia’s fuel market is illustrated by data published by the industry portal InfoTEK. According to its August 24 snapshot, AI-95 petrol, the widely used 95-octane grade, was available at only 5,620 of Russia’s 26,098 operating filling stations, or 22%. Even in Moscow, it could be found at 161 of 786 operating stations, about 20%. Russia has also temporarily relaxed restrictions on lower environmental grades of fuel, including Euro 4, Euro 3 and Euro 2, known in the Russian classification as K4, K3 and K2. Since 2016, only fuel meeting at least the Euro 5 standard had generally been permitted. Russian economist Boris Grozovsky estimates that, given the refining capacity knocked out by Ukrainian strikes and the number of plants undergoing repairs, Russia is currently short of roughly one-third of the petrol needed at peak demand. August is traditionally a high-demand month because of summer travel and agricultural work. “If it were November now, the situation would be a little easier for the Russian government. Russia is trying to bring in petrol from India, Morocco, Turkey, Kazakhstan and Azerbaijan, but imports also have limitations. The petrol brought in from India turned out to be too expensive,” Grozovsky said. Kazakh Refinery Steps In Speaking at a government briefing on August 25, Kazakhstan’s Energy Minister Yerlan Akkenzhenov said that the small Condensat refinery in Aksai, West Kazakhstan Region, would process Russian crude, with around 70% of the petrol and diesel it produces sent to Russia. Up to 30% will remain on the Kazakh market, while the refinery also retains the right to export products outside the Eurasian Economic Union. “Under the agreement we currently have, up to 30% of the petroleum products in demand, petrol and diesel, will remain in Kazakhstan, while the rest will be shipped to the Russian Federation,” the minister told reporters. Akkenzhenov said the arrangement reflected Condensat’s location close to the Russian border. The refinery is not connected by pipeline to either country’s main oil network, meaning both crude deliveries and fuel exports depend on rail capacity. Akkenzhenov also stressed that the refinery’s owner is not under sanctions and said the Energy Ministry did not see sanctions risks for the project. He said the arrangement would also bring investment and preserve jobs at a refinery that has struggled financially. Condensat’s Financial Troubles Condensat was established in...