Economic Development - October 2018

Kazakhstan accounts for more than 70% of all investment coming to region. In first six months of 2018, agreements were reached by Kazakhstan to implement 69 new projects with large investors, including ten multinational companies from China, Turkey, United States, UAE, UK and European Union.

It was stated at Kazakhstan Global Investment Forum in London that Kazakhstan is an “overlooked powerhouse” and one of world’s next big investment destinations. Several billion pounds of inward investment is expected to enter Kazakhstan over the next five years. Kazakh Invest stated that it had prepared 70 specialist projects across agriculture, chemicals, mining and metallurgy, engineering, retail, tourism, and energy, offering opportunities for international investors.

European Bank for Reconstruction and Development (EBRD) has approved a new strategy for Uzbekistan, for next five years. This strategy reflects recent changes in political and macroeconomic environment of the country. This is dictated by a large-scale reform program launched by government at end of 2016 aimed at moving towards a more open, integrated market economic model, improving international relations, strengthening rule of law and judicial independence, achieving currency regulation liberalization. The new EBRD strategy for Uzbekistan recognizes the need to strengthen country's democratic institutions, expand the role of civil society, provide greater freedom to media and promote women's entrepreneurship.

Russia's Gazprom announced that it will resume next year imports of natural gas from Turkmenistan that it stopped three years ago due to price disputes. Russia was once leading importer of Turkmen gas until it was displaced by China around beginning of decade. Relatively cheap imports of gas from Turkmenistan and other Central Asian countries enabled Russia to boost its exports to Europe. Before 2009, Turkmenistan exported more than 40 bcm of natural gas to Russia.

International Monetary Fund (IMF) has revised up its 2018 growth projection for Kazakhstan by 0.5% to 3.7%. Revision reflects stronger oil production, though “medium-term prospects remain subdued”. GDP growth in 2019 is expected to slow to 3.1%.

Regarding other Central Asian countries, Uzbekistan’s growth is expected to decelerate slightly to 5% in 2018 and 2019 from 5.3% in 2017.

Turkmenistan is expected to post 6.2% growth in 2018 and 5.6% in 2019, down from 6.5% in 2017. Figures are undermined by Turkmen government’s unreliable statistics.

Tajikistan's growth will fall to 5% in 2018, down from 7.1% in 2017. In 2019, Tajik growth is expected to remain at 4%.

Kyrgyzstan’s growth is also seen slowing in 2018 to 2.8% compared to 4.5% in 2017. A recovery to 4.5% is anticipated for 2019.

Kazakhstan’s external debt decreased by US$2.2 billion in second quarter of 2018. As of July 1, Kazakhstan’s external debt is US$164.4 billion, or 96% of GDP.

2018 has been a good year for Kazakhstan’s National Fund, principally due to resurgence in price of oil. Over first nine months of 2018, payments to National Fund increased by 52% year-on-year in local currency terms. Without accounting for returns on investments, more than US$5.8 billion have been deposited in National Fund. Natural gas is generating considerable revenue. In first seven months of 2018, Kazakhstan earned US$1 billion from gas sales, a rise of 25% year-on-year. Main importer was China, which bought five times the quantity of Kazakh gas as it had the year before. Revenue generated increased eight-fold. Volume of gas export to China in 2018 is expected to be 5 bcm which could go up to 10 bcm in 2019.

Settlement of a long-standing dispute with partners in production-sharing agreement on Karachaganak gas condensate project will see Kazakhstan receive US$1.1 billion upfront and earn a greater portion of profits in future.

Sterling and Wilson, World’s leading solar EPC company, has announced its plans to enter Kazakhstan. Company is targeting EPC for Solar PV projects of capacity 200 MW in Kazakhstan till 2020. Kazakhstan aims to reduce its dependency on fossil fuel power generation to alternative energy. It plans to increase its share of renewable energy in electric power generation to 3% by 2020 and to 10% by 2030.


October 26, 2018




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About the Author

Ambassador Ashok Sajjanhar

Former Ambassador of India to Kazakhstan, Sweden and Latvia; President, Institute of Global Studies and Distinguished Fellow, Ananta Centre

Ambassador Ashok Sajjanhar belongs to the Indian Foreign Service and has acquitted his responsibilities in the diplomatic service for 34 years. He was Ambassador of India to Kazakhstan, Sweden and Latvia and has worked in senior diplomatic positions in Indian Embassies/Missions in Washington DC, Brussels, Moscow, Geneva, Tehran, Dhaka and Bangkok and also at Headquarters in India. He negotiated for India in the Uruguay Round of Multilateral Trade Negotiations and in negotiations for India-EU, India-ASEAN and India-Thailand Free Trade Agreements.

He contributed significantly to strengthening strategic ties and promoting cultural cooperation between India and USA, EU, Russia and other countries.Ambassador Sajjanhar worked as head of National Foundation for Communal Harmony to promote amity and understanding between different religions, faiths and beliefs. Ambassador Sajjanhar has been decorated by Governments of Kazakhstan and Latvia with their National Awards and by Universal Peace Federation with Title of ''Ambassador of Peace.'' Currently Ambassador Sajjanhar is President of Institute of Global Studies, New Delhi. He writes, travels and speaks extensively on issues relating to international relations, foreign policy and themes of contemporary relevance and significance. He appears widely on TV panel discussions. Ambassador Sajjanhar is interested in reading, music and travelling. His wife Madhu is an economist and an educationist. They have a son and a daughter both of who are accomplished singers. Their son passed out of Yale University and their daughter is pursuing her PhD at University of Minnesota.