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kazakhstan: paving the way for economic transformation and global connectivity

Kazakhstan: Paving the Way for Economic Transformation and Global Connectivity

Author: Meray Ozat

Sep 8, 2023

Image source: Akorda

On September 1, 2023, Kazakh President Kassym-Jomart Tokayev announced Kazakhstan’s “new economic course” during his 90-minute state-of-the-nation address, marking a shift in the country’s economic trajectory. Focusing on the topic “Economic Course of a Just Kazakhstan,” President Tokayev laid out forthcoming economic and political reforms across key sectors, including business, trade, defense, geology, and transport. The event was attended by Parliament members, central government agency heads, Congress representatives, and high-level figures from civil society. The address provided a transformative roadmap for Kazakhstan and Central Asia, given the prevailing geopolitical tensions and ongoing global energy crisis.

Despite challenging global circumstances, Kazakhstan has overall shown positive trends in its key economic indicators in the last year. The 2022 economic reforms yielded impressive results, with achievements such as a GDP exceeding $226 billion, foreign direct investments reaching $28 billion, and foreign trade volume at $134 billion. However, the president noted that the transition into a developed nation requires comprehensive social and economic transformations.

President Tokayev emphasized the urgency of economic diversification in the face of rapid global economic growth and competition. He introduced a new economic model founded on principles of fairness, inclusiveness, and pragmatism, stressing the pivotal role of the manufacturing sector in achieving economic self-sufficiency. Kazakhstan's economic strategy also encompasses the development of a comprehensive production cycle to reduce reliance on foreign goods.

Transportation emerged as a key strategic focus due to Kazakhstan's advantageous location at the crossroads of global trade routes. Kazakhstan can exploit its geographical strengths and potential to diversify its trade partners and economy. President Tokayev underscored Kazakhstan's expanding role in connecting Asia and Europe and the need to harness its potential as an effective transit hub. To be specific, he expressed that the transportation and logistics industry should be the “cornerstone of the country’s economic development” and Kazakhstan should continue to strengthen its position and become a “full-fledged power” in the sector. The transportation and logistics sector, representing 6.2% of GDP in 2022, is slated for further growth, aiming to raise its share to at least 9%.

The Trans-Caspian International Transportation Route (TITR) presents Kazakhstan with the potential for significant economic growth. This route, otherwise known as the Middle Corridor, provides Kazakhstan with an additional transit route through the Caspian Sea, serving as a gateway to Western markets while simultaneously bypassing Russian borders. The president envisaged a fivefold increase in transportation volume along this route in the medium term through coordinated efforts with partner countries such as China, Azerbaijan, Georgia, and Türkiye. Reaching the potential of this route necessitates efficient oversight mechanisms and the implementation of numerous infrastructure projects. Within Tokayev’s speech, the Dostyk-Moyinty railway, the Bakhty-Ayagoz railway, and the Darbaza-Maktaaral railway were listed as several projects to be completed as the first step toward unlocking the TITR’s economic potential.

In addition to the TITR, the president also addressed development plans for other projects that complement the trans-Caspian transportation network. One of the projects listed within the development plans is the North-South corridor, which connects Kazakhstan with Persian Gulf ports. This development includes the modernization of railways within Kazakh territory, such as the Bolashak-Chelyabinsk railway. 

Collaboration with neighboring countries, especially countries part of the Chinese Belt and Road Initiative, can help strengthen Kazakhstan’s infrastructure potential. Ongoing projects like the Kazakh terminals in Xi'an, China, and the Georgian port of Poti, can help encourage cooperation and promote positive engagement within the region.

During his speech, the President's commitment to improving the transportation sector was demonstrated by the official establishment of a specialized government body, known as the Ministry of Transport. This Ministry will be responsible for supervising the progress of railway projects with the goal of attracting foreign investment and expanding international trade. The Ministry has also been tasked with enhancing road construction standards, including an ambitious plan to reconstruct approximately 4,000 kilometers of roads by the year 2029. These plans underscore Kazakhstan’s commitment to achieving concrete economic outcomes through practical steps within the framework of the new economic model.

In sum, this address underscores Kazakhstan's dedication, and aspirations to become a significant participant, not only within Central Asia but also as a pivotal transport hub in the global economy. If these reforms are executed effectively, they are anticipated to yield substantial benefits. The primary objective of these proposed changes is to achieve a steady economic growth rate between 6% and 7%, with the objective of doubling the national economy's size to $450 billion by 2029. The particular emphasis on enhancing the Trans-Caspian corridors serves as a clear indicator of Kazakhstan's commitment to unlocking regional economic opportunities and strengthening collaboration with its neighbors.


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