JPMorgan - KASE

The Kazakhstan Economy
Overview
Kazakhstan has experienced extensive economic transformation since the introduction of the
national currency, the tenge, in mid-November 1993. By mid 1999, the Government’s structural
reforms had achieved significant results in the key areas of financial stabilization, privatization
and price liberalization. Real GDP, which had fallen by 38.6 per cent. between 1990 and 1995,
grew by 0.5 per cent. in 1996 and 1.7 per cent. in 1997. In 1998, real GDP fell by 1.9 per cent. in
the aftermath of the Asian and Russian financial crises which exacerbated the effect of
significantly decreased commodities prices. The flotation of the tenge in April 1999, coupled with
the improvement in the global economic environment and strong agricultural growth enhanced
the international competitiveness of Kazakhstan’s exports and enabled the economy to revive
and in 1999 full year real GDP growth was 2.7 per cent. By the end of the year 2001, year-on-year
real GDP growth had reached 13.2 per cent.
Gross Domestic Product
The informal, or “black”, sector constitutes a significant portion of Kazakhstan’s economy and
the NSA makes adjustments to its GDP data in accordance with approved IMF practices in order
to reflect this. For example, the 1999 data reflect adjustments made on the basis of the NSA’s
estimate that the informal economy (including the household sector) contributed in the region of
37.0 per cent. of GDP in that year. Others have, however, given even higher estimates of the
contribution of the informal economy.
The following table sets forth certain information on Kazakhstan’s GDP for the periods indicated:
Six
months
ended 30
June 2002
Year ended 31 December
2001 2000 1999 1998 1997
Nominal GDP (Tenge
millions) (1) ............. 1,670,700 3,285,400 2,595,965 2,016,240 1,733,264 1,672,142
Real GDP (Tenge millions) (1) _ 2,089,700 1,846,045 1,667,345 1,640,060 1,672,142
Real GDP (per cent. change
to the previous year) .... 9.2 (2) 13.2 9.6 2.7 (1.9) 1.7
Real GDP (per capita
(Tenge)) (1) ............. _ 41,000 124,400 112,644 108,827 109,045
Population (millions
average annual) ........ 14.8 14.82 14.84 14.9 15.1 15.3
Source: NSA
Notes:
(1) Amounts in Tenge adjusted to 1997 Tenge equivalents.
(2) Per cent. change for the same period in 2001.
According to NSA data, real GDP fell by over 30 per cent. between 1991 and 1995. This decline
was due to a combination of factors, including the recession in the Russian economy, which had
traditionally been the primary market for Kazakhstan’s exports and a major source of the
country’s imports, the disruption caused by the transition from a centrally-planned, command
economy to a market economy, poor economic performance in the agricultural sector as a result
of abnormal drought conditions, poor performance in other industrial sectors as a result of the
disruption to established economic relationships between the countries of the former Soviet
Union and the lack of adequate working capital to sustain the business sector in the initial stages
of the transition to independent statehood.
However, real GDP increased by 0.5 per cent. in 1996 and by 1.7 per cent. in 1997. The reversal of
the decline in GDP was principally the result of three factors: systemic reforms, including price
and trade liberalization as well as privatization; foreign investment which revitalized enterprises,
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