Astana faces economic slowdown

With falling oil prices, double-digit inflation and a weak national currency, the World Bank predicts that growth in 2026 will not exceed 4.5%. And there is controversy in the country over the VAT increase, which could lead to a general decline in the standard of living of the Kazakh population.

Astana (AsiaNews) - According to forecasts, Kazakhstan's economy - the most important among the countries of Central Asia - is expected to slow down in the year just begun, with falling oil prices on the world market and VAT increases, which will affect small and medium-sized enterprises and lead to price increases for various commercial items.

Inflation is expected to remain in double digits, around 10-11%, the dollar will exceed 600 tenge and high interest rates will limit the population's income and business development, according to economists.

In the context of multiple sanctions regimes and competition between major powers, which increase geopolitical risks, the most favourable prospect for attracting new investment and strategic opportunities remains that of rare earths, which the country is potentially rich in but which have not yet been adequately identified and exploited.

For this reason, experts from international institutions believe that Kazakhstan could face a number of economic and political risks in 2026. Between January and November of the past year, the Kazakh economy grew by 6.4% according to official data, with the construction of new infrastructure and an increase in oil production, but the instability of the national currency and high inflation required significant state funding.

The World Bank forecasts a global economic slowdown in the current year, and experts at Halyk Finance confirm this prognosis for Kazakhstan as well. Their report at the end of 2025 forecasts 4.5% growth in 2026, compared to the Astana government's forecast of 5.4%.

Last year, the government had to withdraw 5.25 trillion tenge (almost 9 billion euro) from the National Fund. Interest rates will now be raised precisely to avoid continuing with withdrawals that have become unsustainable, from 12% to 16%, with a registration threshold that drops from 78 million tenge to 43 million, forcing most businesses, even small ones, to pay VAT without exemptions.

Many will be forced to close, leading to a general decline in the standard of living of the Kazakh population.

In the Mažilis, the parliament in Astana, there are already several voices protesting against these economic measures, such as that of MP Ajtuar Košmambetov, who said, “We discussed the Tax Code at length last year, without achieving any significant results, and as a result, around 400,000 small business owners have been placed in serious difficulty, faced with the choice of either moving to a different tax regime or closing down”.

Economist Meruert Makhmutova notes that the government has failed to adequately assess the impact of VAT increases on businesses and how the measures will affect the 1.8 million Kazakhs living on a minimum wage of 85,000 tenge (less than £150).

When entrepreneurs asked for a review of the VAT decisions, Economy Minister and Deputy Prime Minister Serik Žumangarin said that the decision had already been made, pointing to the example of Russia, where rates are even higher, up to 20-25%, considering it ‘a common practice worldwide’ and demonstrating how Kazakhstan is still dependent on Russia in many areas, even though the minister assures that ‘ours is a state open to listening to its citizens, we have been discussing this reform for a whole year’.

Prime Minister Olžas Bektenov had expressed similar views in various statements last year, confident that “with VAT at 20%, our economy will be able to grow”, even if it is an “unpopular but necessary” measure.

The government has nevertheless proposed to President Tokaev that he approve projects to support businesses, but the economic situation is too unpredictable against the backdrop of trade and geopolitical wars, which are changing economic relations almost daily, and no one can say with certainty what scenario will unfold in the immediate future.

• Kazajistán
• Astana
• economía
• Tokaev
• tenge
• Banco Mundial
• Rusia