Falling Exports Undermine Kazakhstan’s Economic Stability

Kazakhstan's export revenues fell by 9.2% in the first five months of 2025 compared to the same period in 2024, dealing a fresh blow to the country’s economy. According to data compiled by Finprom.kz, total goods exports dropped to $29.8 billion, down from $32.8 billion, a loss of more than $3 billion. Commodity Dependency Drives Decline The steepest decline was recorded in the fuel and energy sector, which saw a shortfall of $2.4 billion. Total exports of oil, gas, and related raw materials amounted to $16.9 billion from January to May, a 12.6% decrease year-on-year. The downturn also extended to Kazakhstan’s manufacturing sectors: metallurgical exports fell by 6.5%, the chemical industry by 17.7%, and machine building by 21.7%. While the share of fuel and energy products in Kazakhstan’s export structure dropped to 56.9% in January–May 2025, down from the 65–67% range seen between 2019 and 2024, this shift was not driven by a rise in high value-added goods. These accounted for just 13.5% of total exports. Oil and Metals Lead Revenue Losses Oil was the primary source of lost export revenue. The volume of crude shipments declined by 6.6%, from 31.2 to 29.1 million tons, while export earnings fell by 13.9%, costing the country $2.6 billion. Other key raw material categories also recorded substantial losses: refined copper exports fell by 20.6%, copper ores and concentrates by 26.8%, iron ore by 16.4%, aluminum by 10.4%, and uranium by 24.2%. Only a few sectors posted gains. Exports of ferroalloys rose by 8.1%, wheat and meslin by 58.3%, and rolled iron by 13.1%. One standout performer was heat-generating assemblies for nuclear power plants produced in Ust-Kamenogorsk, their exports nearly doubled and are supplied exclusively to China. Trade Imbalance Worsens The export slump contributed to a broader contraction in Kazakhstan’s foreign trade. Total trade turnover from January to May stood at $53.5 billion, down 4.5% from the previous year. Imports, however, increased by 2.2%, further widening the trade gap. Kazakhstan has recorded lower export volumes each month of 2025 compared to 2024. In January, exports were down nearly 14%. Although the gap narrowed slightly in subsequent months, May figures remained below last year's levels. Italy continues to be Kazakhstan’s largest export market, accounting for 23.1% of total exports. Despite an 11% decline in volume, Italian purchases totaled $6.9 billion. China is the second-largest destination, increasing its share from 17.4% to 17.6%, with $5.2 billion in imports. Russia ranks third, importing $2.9 billion in goods, including automobiles, chemical products, and metal ores. Analysts warn that Kazakhstan’s continued reliance on raw materials and its low share of high-tech exports represent systemic risks. Without substantial industrial modernization and entry into new markets, the country remains vulnerable to global commodity price fluctuations, endangering long-term macroeconomic stability.

Opinion – Storm Clouds Over Kazakhstan: Oil Slump and Global Risks Threaten Economic Stability

The persistent decline in Brent crude prices is the latest sign of a looming 'perfect storm' for Kazakhstan’s economy, the largest in Central Asia. With the mining sector comprising nearly half of its GDP and oil as a cornerstone resource, the nation’s economic stability is facing a cascade of potential shocks. Oil Prices and Budget Vulnerability Kazakhstan is grappling with significant economic headwinds amid forecasts of a global recession and declining energy prices. In April 2025, OPEC+, including Kazakhstan, unexpectedly agreed to raise oil production by 411,000 barrels per day, pushing prices below $65 per barrel. Given the country's reliance on hydrocarbon exports, such price drops jeopardize state revenues. Analysts say Kazakhstan needs oil prices to remain above $42.30 per barrel in 2025 to maintain fiscal stability. However, the threat extends beyond oil. As energy journalist Oleg Chervinsky noted on his Telegram channel, global commodity prices across the board are falling, a signal that recession is imminent. “The bad news for Kazakhstan is that prices are dropping not only for oil but for all raw materials,” Chervinsky wrote. “JP Morgan estimates the global recession probability at 60%. Even though oil and gas are exempt from Donald Trump’s new tariffs, the broader protectionist policies could fuel inflation, curb growth, and escalate trade tensions”. Trump's Trade War and Kazakhstan President Donald Trump’s sweeping tariffs are designed to limit low-cost imports and incentivize domestic production. Kazakhstan has been hit with a 27% tariff, the highest among the Central Asian nations. Its strategic location within China’s Belt and Road Initiative positions it as a potential re-export hub, prompting higher trade scrutiny. Kazakhstan’s Ministry of Trade and Integration has downplayed the immediate economic impact, noting that U.S.-bound exports account for less than 5% of total trade, and the country still holds a $1 billion trade surplus with the U.S. While the direct fallout may be limited, the broader implications of a global trade war could severely strain Kazakhstan’s economy. If a global recession takes hold, demand for Kazakhstan’s key exports, oil, uranium, and metals, will drop, dragging prices down further. Currency Pressures and Investor Retreat With shrinking export revenues, the tenge faces devaluation, leading to inflation, rising import costs, and weakened consumer purchasing power. In addition, recessions typically dampen foreign direct investment, especially in emerging markets like Kazakhstan, where perceived risk grows amid uncertainty. The China Factor The U.S.-China trade conflict is another critical variable. Trump’s strategy aims to undercut Beijing’s economic strength, but for Kazakhstan, China is its largest trading partner, representing over 15% of foreign trade. A slowdown in China would reduce demand for Kazakhstani raw materials and transit services. Such a downturn could also jeopardize President Kassym-Jomart Tokayev’s ambition to establish Kazakhstan as a vital trade corridor between China and Europe. While the Belt and Road Initiative is unlikely to collapse, reduced cargo flows would strain state revenues. China is also the primary buyer of Kazakhstan’s copper, aluminum, and ferroalloys. Any industrial slowdown there immediately impacts Kazakhstan's export volumes. Converging Risks Taken...