Kazakhstan’s economy is projected to remain resilient over the medium term, though growth will moderate after a strong demand-led expansion. Following a robust 6.5 percent growth in 2025, driven by domestic consumption and a temporary boost in oil production from the Tengiz field, growth is expected to ease to 4.6 percent in 2026 and stabilize around 3.5 percent by 2028. This reflects the normalization of oil output and the limits of demand-driven growth without deeper structural reforms.
The World Bank’s latest Kazakhstan Economic Update highlights human capital as a critical driver of long-term competitiveness. While unemployment remains low, deficits in foundational skills such as literacy, numeracy, and problem-solving are constraining productivity and innovation. Addressing these gaps is seen as essential for economic diversification and the creation of higher-value jobs.
Inflation remains a pressing challenge. After accelerating to 12.3 percent year-on-year in December 2025 due to quasi-fiscal expansion and rising import costs, inflation is expected to stay above the central bank’s 5 percent target through at least 2027. Risks include continued fiscal stimulus and the lifting of freezes on fuel and utility tariffs, while rapid credit growth and inflationary expectations limit monetary policy effectiveness.
Higher oil prices are expected to strengthen revenues, narrow the fiscal deficit, and improve Kazakhstan’s external position in 2026. However, risks remain from geopolitical tensions and volatile global energy markets, which could weaken demand from trading partners and reduce export revenues.
The report cautions that further quasi-fiscal expansion could intensify cost-of-living pressures amid rising household debt. On the positive side, decisive structural reforms could lift potential growth, attract investment, and support private-sector-led diversification.
The Kazakhstan Economic Update provides an annual assessment of recent economic developments, medium-term outlook, and policy priorities, emphasizing that productivity growth through stronger human capital is central to sustaining resilience and long-term prosperity.
