Kazakhstan macro: Economic growth reportedly accelerates as tax collection improves

KAZAKHSTAN - Report 23 Apr 2025 by Evgeny Gavrilenkov

The Bureau of National Statistics reported that the short-term indicator (a monthly proxy of combined economic activity in industry, agriculture, construction, trade, transportation/warehousing, and IT/communications) grew by 8.3% y-o-y in 1Q25. In March alone, its y-o-y growth was even higher (9.9%). In 2M23, this indicator was up by 7.3%, and in January alone, it grew by 4.5% (both figures are y-o-y). The NBK chairman also referred to accelerated economic growth in Kazakhstan. According to him, the country’s economy grew by 5.8% y-o-y in 1Q25, i.e., faster than in 2024 (4.8%).

To some extent, the strong growth numbers are mirrored in budgetary statistics, especially in the case of local budgets that do not depend much on the exchange rate and the oil price and reflect a broader range of economic activity. In 1Q25, the combined tax revenues of local budgets accounted for 27.8% of the annual plan and were well ahead of the quarterly target. Tax revenue flow looked less impressive on the republican level, but there was an improvement compared to 2024 as the tenge weakened. We expect that the tenge will continue to weaken gradually, and one cannot rule out that it will gradually de-peg from the ruble.

Interestingly, economic growth accelerated in 1Q25 amid delayed financing from the budgets at all levels. Overall, the 1Q25 economic and budgetary statistics again confirm that budget stimulus in Kazakhstan from permanent upward expenditure amendments wasn’t so necessary—at least in the amounts the government had chosen.

Generally, we reiterate our view that USD/KZT could move to 550-560 this year (assuming no upward budgetary amendments this year), and it should keep weakening further in 2026 as inflation will remain elevated. A gradual weakening of the tenge will support economic growth and secure more tax revenues for the budgets of all levels. This will require limited FX intervention and transfers from the National Fund, while the latter may start growing again. GDP growth of about 5.5% looks achievable this year—even with no additional budgetary stimulus.

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