KAZAKHSTAN TO STRENGTHEN INDUSTRIAL DEVELOPMENT BY 2014 9/15/2010

Focus on transport networks - 5,500km of new roads to be built, and significant investment in light industry promised...

In a meeting in Astana on September 8th, the Kazakh government approved eight quadrennial plans on the development of several key economic sectors- including transport, light industry and the production of building materials. In addition, to stimulate economic growth, the government aims to differentiate its tariff policy.

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GDP FIGURES FOR 2010 ANNOUNCED 9/3/2010

Kazakhstan’s Minister of Development & Trade, Ms Zhanar Aitzhanova announced yesterday that real GDP growth for 2010 should amount to 3.1%, followed by 3.3% in 2011 and 3.5% in 2012. “During the period 2013-2015, the figure will be flat at 4.1%” said Ms Aitzhanova. The Minister added that these forecasts are based on estimated oil prices of USD 65 per barrel.

Ms Aitzhanova also announced several other positive forecasts: industrial production output should grow by 3.6% in 2011 and by 3.9% per annum in 2012-2013; gross agricultural output annual growth in 2011-2015 is estimated at 4.3%; trade is to grow by 4% in 2011, 4.1% in 2012 and 4.4% in 2013 - reaching 5.4% in 2015.

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KAZAKH URANIUM PRODUCTION STILL INCREASING 8/19/2010

Uranium production volume in the Republic of Kazakhstan for the first six months of 2010 amounted to 8452tU, i.e. 42% more than in the corresponding period of 2009, according to the Kazakh national nuclear company, Kazatomprom.

According to the company, uranium production in the second half of 2010 is expected to reach 9770tU. This will put the total production in 2010 at 18,200tU, which represents a 30% increase on 2009 production (13,900tU).

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KAZAKHSTAN: FDI GREW BY 3% IN THE FIRST HALF OF 2010 8/18/2010

From January to June 2010, net FDI into the Kazakh economy made up $5.109 billion, announced Chairman of the National Bank Grigory Marchenko at a press-conference in Almaty yesterday. This is a 3% increase as compared to the same period in 2009 ($4.974 billion).

Mr. Marchenko noted that further investments into Kashagan and other O&G projects as well as joint projects with Russia and China significantly contributed to the growth of FDI.

“Given the investments to GDP ratio, Kazakhstan remains one of the most attractive countries for investors in the world”, he added.

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KAZAKHSTAN’S GDP GREW BY 8% IN THE FIRST HALF OF 2010 8/18/2010

The GDP of the Kazakh economy reached $59.4 billion from January to June 2010, according to the Kazakh Agency for Statistics. This represents an 8% increase, compared to the same period in 2009.

The Kazakh Agency for Statistics noted that goods accounted for 40.5% of the GDP, with services being responsible for 56.8%.

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KAZAKHSTAN ON ROAD TO RECOVERY, ACCORDING TO IMF 8/17/2010

Kazakhstan is recovering from economic crisis, but stagnant credit growth and banking sector troubles continue to weigh on economic activity, according to the International Monetary Fund (IMF).

In its annual health check of the oil-rich Central Asian economy, the IMF forecasts that the economy will grow by 4 percent in 2010, mainly driven by higher exports, increasing commodity prices, and foreign direct investment.

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Economic Overview

Economic indicators paint a bright picture of Kazakhstan’s future. With a GDP growth rate around 10 % since 2000 the country is among the fastest growing economies of the world and outpaces all other Central Asian states by far. In the first eight months of 2007 the GDP has grown by 10,2 % : Kazakhstan continues the trend of two digit growth rates.

Foreign trade turnover shows a similar evolution. It has been rising over the past 10 years at an annual average growth rate of 19,1 % (highest rate for the 1995-2006 period worldwide) to reach 50 168,3 million USD by the end of August 2007. Thanks to high oil and gas prices as well as an increase oil export volumes, the country will again reach a positive balance of trade in 2007. Russia is still one of Kazakhstan's main trading partners and its major source of imports. The bulk of Kazakh exports to the West consist of raw materials, particularly oil and metals.

Its dynamic growth makes the Kazakh economy attractive for foreign investors. Foreign direct investments into Kazakhstan account for about 80 % of all capital inflows into the Central Asian economies, with EU countries being the most important source of investments. The highly developed banking system, stable institutions and investment-friendly government policies further encourage foreign investment.

Transition to market economy

Today’s economic situation is the result of a 17 year-long transition period from a former Soviet economy to a free market economy. Since independence from the Soviet Union in 1991, Kazakhstan has implemented a wide range of social, economic and political reforms. After a period of economic decline and high inflation in the 1990ies, the reforms now show their results. Priorities of current economic policy are the diversification of the economy, namely the strengthening of the non-oil industries to reduce the country's dependence on natural resources.

Because of its strong macroeconomic performance, Kazakhstan became the first former Soviet republic to repay all its debts to the International Monetary Fund (IMF) in 2000, seven years ahead of schedule. In March 2002, the U.S. Department of Commerce graduated Kazakhstan to market economy status under U.S. trade law. The change in status recognized substantive market economy reforms in the areas of currency convertibility, wage rate determination, openness to foreign investment, and government control over the means of production and allocation of resources. In September 2002 Kazakhstan became the first country in the CIS to receive an investment-grade credit rating from the major international credit rating agency Moody's.

Between 2005 – 2007, 18 Kazakh companies (4 companies on main market + 10 AIM companies, operation not incorporation, + 2 companies Debt Securities) were listed on the London Stock Exchange. Kazakhstan was the first CIS country to be granted market economy status by the EU in 2001 and USA in 2002, and to be moved to investment grade status by Moody’s in 2002.

Ratings as of 5 August 2008: (LTFC/LTDC/Outlook): Moody’s Baa2Baa1/Stable; Standard & Poor’s BBB-/BBB/Negative; Fitch BBB/BBB+/Negative. In January 2005 the Organisation for Economic Cooperation and Development (OECD) upgraded Kazakhstan’s country export risk rating, moving it from the 5th to the 4th group of risks.

National Production

Kazakhstan is rich in oil and minerals. Production of oil including gas condensate reached 70.6 million tons in 2008, net oil exports accounted for 62.8 million tons. Kazakh gas production in 2008 reached 33.5 billion cubic meters, net gas exports accounted 5.6 billion cubic meters. Kazakhstan holds about 32.5 billion barrels of proven recoverable oil reserves and 3 trillion cubic meters of gas.

Industry analysts believe that a planned increase in oil production and the development of new oil fields will enable Kazakhstan to produce as much as 3 million barrels (477,000 m³) per day by 2015, lifting the country into the ranks of the world's top 10 oil-producing nations. Major oil and gas fields and their recoverable oil reserves are Tengiz with 7 billion barrels (1.1 km³); Karachaganak with 8 billion barrels (1.3 km³) and 1,350 km³ of natural gas; and Kashagan with 7 to 9 billion barrels (1.1 to 1.4 km³).

Kazakhstan has an abundant supply of accessible mineral and fossil fuel resources. Development of petroleum, natural gas, and mineral extraction has attracted most of the $40 billion foreign investment in Kazakhstan since 1993 and accounts for some 57% of the nation's industrial output (approximately 13% of GDP). According to estimates, Kazakhstan has the second largest uranium, chromium, lead, and zinc reserves, the third largest manganese reserves, the fifth largest copper reserves, and ranks in the top ten for coal, iron, and gold. Kazakhstan also exports diamonds.

Agriculture accounted for 5.9 billion US$ of Kazakhstan's GDP in 2007. Grain (Kazakhstan is the sixth-largest producer in the world) and livestock are the most important agricultural commodities. Around 74% of the country's territory is suitable for agricultural production, 20% of the labour force works in the agricultural sector. Traditionnally, stockbreeding is the dominant agricultural activity. Chief livestock products are dairy products, leather, meat, and wool. The country's major crops include wheat, barley, cotton, and rice. Wheat exports, a major source of hard currency, rank among the leading commodities in Kazakhstan's export trade. By November 2008 Kazakhstan exported around 4.7 mln. tons of wheat. Other agricultural products include fruit and wine. Kazakh agriculture still has many environmental problems from mismanagement during its years in the Soviet Union.

Other key facts

Industrial Production Growth: (2005) 4.6%; (2006) 7% (2007) 4.5%; (Jan-Sept 2008) 3%
GDP per capita: (2005) US$ 3771.3; (2006) US$ 5291.6; (2007) 6814 US$; (2008) 8132US$
Nominal GDP : (2005) US$ 57bn (2006) US$ 81bn
Inflation Rate: (2005) 7.5%; (2006) 8.4%
Unemployment Rate: (2005) 8.2%; (2006) 7.8% (2007) 7.3%
Capital Investment Growth: (2005) 22.1% (2006) 10.6% (2007) 13.5%; (2008) 4.6%
Foreign Direct Investments: (1993-2007) US$ 51.2bn, of which US$ 6.5bn in 2006 (1993-2008) US$ 72.3bn
Internal Investments: over US$ 80bn
Hard currency reserves: (2007) US$ 37.4bn, including National Oil Fund – US$ 15.9bn (17% of GDP)
Natural Resources: The world’s largest reserves of barite, lead, tungsten and uranium; second largest reserves of chromites, silver and zinc; third largest of managanese; significant deposits of copper, gold and iron ore; world class oil and gas reserves.

SOURCES: Ministry of Industry and Trade of the Republic of Kazakhstan, Nationalbank Kazakhstan, Zakon

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