Kazakhstan macro: “Never cared for games they play”
On March 3, the National Bank of Kazakhstan decided to keep the base rate unchanged but hinted that it could decline in 2H26. The regulator mentioned that inflationary pressure is easing and referred to decelerating y-o-y inflation (11.7% in February versus 12.2% in January). The NBK pointed to slowing household credit growth and also mentioned that the effect of the increased VAT has been almost fully absorbed by the economy and offset by the moratorium on regulated tariff indexation. At the same time, the NBK Chairman admitted that inflation expectations remain elevated, as these tariffs will be raised at some point. He also characterized the ongoing tenge appreciation as a favorable factor that has helped contain inflation.
Kazakhstan is not involved in geopolitical disputes and pursues a pragmatic policy. It maintains mutually beneficial economic relations with European and Asian countries, tries to diversify its exports, and welcomes foreign investment. We expect FDI to keep flowing and investments to rise across the board, driving economic growth. The NBK also expects investments to grow at a double-digit rate. Overall, Kazakhstan smartly refrained from participating in various geopolitical games. However, some macroeconomic risks and uncertainties have emerged recently amid the conflict in the Middle East.
The nation’s economic growth has remained strong and better than initially expected. The latter was proven by persistently abundant local budget revenues, which do not depend on such unpredictable factors as oil prices and the exchange rate. This year growth will moderate but will still be impressive. The non-oil economy has been developing steadily in recent years and appears adaptable to various unforeseen factors. Overall, the nation’s growth model is evolving fast. Once global oil markets settle and prices drop to a moderate level, Kazakhstan will likely need a weaker nominal tenge. Its rise since mid-2025, despite falling oil prices (until recently) and double-digit inflation, hasn’t been great for the national budget or the overall economy.
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