Export/Import - The Times Of Central Asia

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Business Climate

Kazakhstan Factories Under Strain as Costs Bite, Economy Shows Mixed Signals

Kazakhstan’s manufacturing sector slipped further in August, with the latest Purchasing Managers’ Index (PMI) falling to 47.9. That was down from 49.9 in July and 49.7 in June, keeping the index below the neutral 50 mark for a third straight month. It also marked the sharpest deterioration in manufacturing activity since March 2022, according to S&P Global and Freedom Holding Corp. From Highs to Lows The striking downturn comes on the heels of a banner year. In December 2024, the PMI reached a record 53.9, capping 11 straight months of expansion. Buoyed by post-pandemic recovery and government support, manufacturing output grew by 6.8% in 2024, the fastest pace since 2011, helping push GDP growth to 5%. But momentum cooled as 2025 began. The PMI slipped to 51.5 in January, reflecting slower expansion after the year-end surge. By June and July, it hovered just under 50, signaling stagnation. Seasonal shutdowns for repairs in August contributed to weaker output, but analysts say the slide points to deeper structural pressures. [caption id="attachment_36026" align="aligncenter" width="1600"] Kazakhstan’s PMI peaked at 53.9 in December 2024 but slid steadily through 2025, falling into contraction territory below 50 by mid-year and hitting 47.9 in August — the sharpest deterioration since March 2022.[/caption] Orders Dry Up, Costs Rise The August report revealed broad-based weaknesses. New orders fell for the first time in 19 months, ending a growth streak that began in early 2024. The decline reflected lower demand from both domestic and export markets. With fewer orders, factories scaled back staffing and cut input purchases. At the same time, costs surged. A weak tenge and fuel inflation made imports more expensive, while logistics delays lengthened supplier delivery times. These pressures forced firms to raise output prices at a faster pace, risking competitiveness. “August saw another sharp decline in business activity in Kazakhstan’s manufacturing sector,” said Yerlan Abdikarimov of Freedom Finance Global, which partners with S&P on the survey. He cited weak demand, volatile commodity markets, rising costs, and currency and tax pressures. Taxes have indeed become a burden. A new code passed in mid-2025 raised the extraction royalties on metals, hitting downstream metallurgy. Inflation stood at 12.2% in August 2025, with the National Bank keeping its policy rate high at 16.5% in a bid to tame prices. That leaves financing costly for businesses, resulting in squeezed margins and thinning confidence. The August survey showed business confidence at its lowest since 2021. While firms still expect growth over the next year, their optimism is increasingly cautious. Industry Responses and Government Initiatives Some executives see hope in the government’s industrial policy. A $400 million cotton-to-textile cluster is under construction with Chinese partners in Turkestan, aiming to process domestic cotton into textiles at scale. Officials say the project, due to start production by late 2025, will create thousands of jobs and expand exports. Light industries, such as textiles and apparel, posted strong growth in the first half of 2025, with clothing up about 5.6% and textiles 5.7% according to official data. Chemicals...

Electricity

Afghanistan Generates 250 MW of Electricity, Imports 800 MW from Central Asia and Iran

Afghanistan’s state-owned electricity company, Da Afghanistan Breshna Sherkat (DABS), has signed or prepared agreements for domestic power generation projects totaling 1,070 megawatts over the past 11 months, with 70% of the funding coming from foreign investors, TOLOnews reported. Speaking in an interview, DABS chief Abdulbari Omar said the initiative marks a significant step toward energy self-sufficiency after years of underinvestment in the sector. “In the past 11 months, we have invested 69 billion Afghanis ($1.01 billion), 70% of which came from abroad. This shows we have encouraged foreign investors to enter the Afghan market,” he said. Afghanistan currently produces about 250 MW of electricity domestically and imports around 800 MW from Turkmenistan, Iran, Uzbekistan, and Tajikistan, at an annual cost of $250-280 million. Omar said the country would need between 6,000 and 7,000 MW to meet domestic demand, rising to 10,000 MW if industrial activity expands. He acknowledged the challenges of developing power from wind, water, gas, coal, and waste, but stressed that projects are moving forward with domestic funds and private investment, without relying on the World Bank or other international organizations. Omar also highlighted the problem of unpaid bills, citing 450 million Afghanis ($6.48 million) owed by former political leaders and warlords. “All individuals, from ministers to ordinary citizens, are treated equally under the law,” he said, noting that power has been cut to ministers who failed to pay. Last year, The Times of Central Asia reported that DABS extended its electricity import agreement with Uzbekistan until the end of 2025. The deal, signed in Uzbekistan by Omar and the National Electricity Company of Uzbekistan, remains vital for meeting Afghanistan’s needs. According to the Taliban-controlled Ministry of Energy and Water, Afghanistan requires around 1,500 MW of electricity, with roughly 720 MW imported and the rest generated domestically.

Bilateral Trade

China-Central Asia Trade Nearly Triples Since 2020

Trade between China and the countries of Central Asia reached $66.2 billion in 2024, nearly triple the 2020 level, according to the Eurasian Development Bank (EDB). Imports from China accounted for about 60% of total trade turnover. China’s largest trading partner in the region is Kazakhstan, with bilateral trade valued at $30.1 billion (46% of total China-Central Asia trade), followed by Uzbekistan at $18 billion (27%) and Turkmenistan at $10.6 billion (16%). China’s share in Central Asia’s overall trade turnover has risen sharply, from 17.7% in 2020 to 24.1% in 2024. However, the level of dependence on Chinese trade varies by country: Turkmenistan - 55% of its total trade is with China. Kyrgyzstan - around 35%. Kazakhstan, Uzbekistan, and Tajikistan - between 20-22%. The EDB estimates significant untapped trade potential of $39.3 billion, about 60% of the current turnover. This includes $32 billion in potential Chinese exports to Central Asia (such as automobiles, electronics, and consumer goods) and $7.3 billion in potential Central Asian exports to China (including copper products, gold, and uranium). With deepening economic ties and major infrastructure links through the Belt and Road Initiative, analysts expect China-Central Asia trade to continue expanding in the coming years.

economic slowdown

Kazakhstan Faces Turbulence as External Pressures Mount

Kazakhstan, Central Asia’s largest economy, is facing a convergence of pressures that President Kassym-Jomart Tokayev and National Bank Chairman Timur Suleimenov must now manage simultaneously, from currency depreciation and geopolitical turmoil to volatile oil markets and contentious fiscal reforms, that are testing its economic resilience. Geopolitical Pressures Escalate By mid-2025, it had become increasingly apparent that Kazakhstan has limited capacity to influence global geopolitical dynamics. Like many “middle powers,” the country must adapt to the actions of larger states, whose unpredictable decisions continue to exert downward pressure on the tenge and fuel inflation. On July 28, U.S. President Donald Trump shortened a previously issued 50-day ultimatum to Russian President Vladimir Putin, giving him just 10-12 days to agree to a peace deal with Ukraine. This development added to the mounting uncertainty already impacting Kazakhstan’s economy. As previously reported by The Times of Central Asia, analysts warn that Trump’s secondary sanctions, 100% tariffs targeting Russia’s trading partners, could potentially be extended to Kazakhstan and other Central Asian economies. Though Kazakhstan is not among Russia’s largest trading partners, its economic links to Moscow are still substantial. The country relies heavily on imports from Russia, including electricity, gasoline, food, and medicine. Adding to the pressure, on July 7, Trump announced a 25% tariff on Kazakhstani goods, effective August 1, 2025. While $1.8 billion of Kazakhstan’s $2 billion in exports to the U.S. (mostly oil, metals, and rare earth elements) are exempt, the move has nonetheless rattled Kazakhstan’s already fragile industrial sector and spooked investors. Oil price instability, largely driven by Western efforts to curtail Russian exports, also poses a major risk. Oil revenues make up the bulk of Kazakhstan’s export income and are a key source of budget financing. Further complicating matters, new Russian restrictions require foreign tankers to obtain Federal Security Service (FSB) approval before accessing key Black Sea ports. This affects the Caspian Pipeline Consortium (CPC), which handles more than 80% of Kazakhstan’s oil exports and is partly owned by U.S. firms Chevron and ExxonMobil. Reuters estimates the new rules could disrupt over 2% of global oil supply. Tenge Hits Historic Low As of July 28, the tenge dropped to a record low of 544.87 per U.S. dollar. The depreciation is driving up the cost of imports, an acute problem in an import-dependent economy, pushing more families to spend over half their income on food. Companies with debt obligations in U.S. dollars are also seeing their liabilities grow, worsening the investment climate and prompting firms to scale back on planned expansions. Central Bank Warns Against Intervention National Bank Chairman Timur Suleimenov cautioned against government intervention in currency markets, a position supported by President Kassym-Jomart Tokayev, who has repeatedly cautioned against short-term administrative measures that can destabilize the economy. Suleimenov noted that past attempts to control the exchange rate led to abrupt and damaging devaluations. Suleimenov attributed the tenge’s vulnerability to rising fiscal injections and an 18% increase in the money supply, stressing that without parallel growth in GDP and industrial output,...

Fuel Exports

Kazakhstan Plans to Export Up to a Third of Its Fuel Production by 2040

The government of Kazakhstan has approved a long-term development strategy for the oil refining industry for the period 2025-2040, significantly increasing its forecast for petroleum product exports. The new plan triples previous export projections, aiming for exports to account for 30% of total production by 2040. According to the strategy, key priorities include expanding refining capacity and boosting exports to China, India, and neighboring Central Asian countries. By comparison, in May 2024, the Ministry of Energy had presented a separate draft strategy looking toward 2050, which proposed limiting fuel exports to 10%, and only in cases where domestic supply exceeded demand. Refinery Modernization and Capacity Goals The new strategy builds on recent progress. Following the modernization of Kazakhstan’s three largest refineries, Atyrau, Pavlodar, and Shymkent, total oil processing capacity reached 17 million tons per year. The plan envisions boosting this figure to 39 million tons annually by 2040. “The refining depth has already reached 89%, and the motor fuel produced now meets Euro-4 standards and higher. These improvements have allowed us to meet 90-95% of domestic demand and created favorable conditions for the export of high value-added products,” the Ministry of Energy stated. The strategy calls for expanding existing facilities and constructing a new petrochemical complex to raise refining depth to 94%. This will ensure full domestic fuel coverage amid projected annual demand growth of 1.5-2%, driven by urbanization and industrial development. A major focus will be the advancement of Kazakhstan’s oil and gas chemical industry, including the production of polymers, fertilizers, and other high-value products. Up to $5 billion is expected to be invested in this sector. “The strategy is designed to attract foreign investment, particularly given the country’s reserves of 30 billion barrels of oil. In the context of the global energy transition, this will position Kazakhstan as a regional leader in hydrocarbon processing and enhance economic resilience to global commodity price fluctuations,” the ministry emphasized. Implementation is scheduled to begin in 2025 with pilot projects for refinery digitization. Current Production and Export Landscape In 2024, Kazakhstan’s refineries produced 13 million tons of petroleum products, 1% more than in 2023, according to national oil and gas company KazMunayGas. This included 4.3 million tons each of gasoline and other fuels, and 4.4 million tons of diesel. Kazakhstan also imported 1.2 million tons of fuel from Russia. Prior to the reintroduction of export restrictions in 2024, the country exported 13,500 tons of motor fuel. Similar bans were in place in 2021, 2023, and 2024, meaning Kazakhstan’s fuel exports effectively occurred only in 2020 (nearly 120,000 tons) and 2022 (1,800 tons). As previously reported by The Times of Central Asia, Kazakhstan is planning to invest $15 billion in its oil and gas chemical sector as part of six major projects aimed at strengthening downstream capacity and export potential.

Energy deficit

Central Asia Faces Growing Energy Deficit

Central Asia is heading toward a serious energy crunch. According to the Logistan.info portal, regional demand for imported natural gas is expected to reach 25 billion cubic meters annually by 2030. This looming shortfall is driven by rapid population growth, around one million people per year, industrial expansion, declining domestic production, and the deteriorating state of aging infrastructure. Recent accidents in Bishkek, Tashkent, Dushanbe, and Ekibastuz illustrate the scale and urgency of the problem. Kazakhstan: Rising Output, Falling Exports Kazakhstan produced 59.2 billion cubic meters of gas in 2024, representing a 6.4% increase from the previous year. However, nearly half of this was reinjected into oil reservoirs to sustain production. Only 29 billion cubic meters were available for domestic consumption. Soaring internal demand has already led to a sharp decline in exports to China, which fell 40% to 8.7 billion cubic meters. Uzbekistan: From Exporter to Importer Uzbekistan's situation is even more precarious. In 2024, the country produced 44.6 billion cubic meters of gas and 713,400 tons of oil, figures that are in decline, dropping 4.5% and 8.5% respectively. To cover the shortfall, Tashkent has turned to Russia and Turkmenistan, purchasing $1.7 billion worth of gas. Uzbekneftegaz expects to produce just 26.5 billion cubic meters of commercial gas in 2025, far short of projected domestic needs. Kyrgyzstan, Tajikistan, and Turkmenistan Kyrgyzstan and Tajikistan produce virtually no hydrocarbons and rely entirely on imports of these resources. Meanwhile, demand continues to grow in tandem with their populations, and domestic energy generation falls short of even basic consumption needs. Turkmenistan remains the region’s top gas exporter, sending 41.3 billion cubic meters abroad in 2024. However, Ashgabat’s ability to increase exports is limited by its own growing domestic consumption, binding long-term contracts with China, and a lack of large-scale infrastructure development. Investment, Delays, and Structural Challenges While Central Asian governments have announced plans for new hydroelectric plants, combined heat and power stations, and nuclear power facilities, tangible progress remains slow. Kazakhstan, Kyrgyzstan, and Uzbekistan have yet to break ground on any of their proposed nuclear power projects. Key obstacles include a shortage of qualified personnel, water scarcity, environmental concerns, and, above all, insufficient funding. Without substantial foreign investment, modernization efforts are likely to stall. To ease financial pressures, countries in the region have begun raising gas and electricity tariffs. These price hikes aim to offset upgrade costs but have provoked public backlash and fueled inflation. In Uzbekistan, for instance, inflation accelerated to 15% in May 2025, with energy prices cited as the primary driver. The Russian Option Forecasts for regional gas imports remain imprecise, but analysts estimate the need could rise to 20-25 billion cubic meters annually by 2030. Russia appears poised to become the main supplier, though details of supply agreements, including pricing, volumes, and terms, have not been disclosed. Central Asian governments are attempting to keep cooperation with Moscow strictly within the economic sphere, wary of entangling political dependencies. As a result, the region faces a dual challenge: securing energy stability through...