A Growth Diagnostic of Kazakhstan

2023, Paper: "Growth Diagnostics exercises aim to identify the most binding constraints to economic growth in a place, taking account of historical patterns of growth and testing all potential roadblocks at present. Since not all constraints are equally binding and both policy resources and state capacity are limited, reforms will be successful only if they address the areas with the largest potential impact. To conduct a growth diagnostic exercise, it is useful to first characterize the recent growth dynamics of the place of study. From the end of the 1990s, Kazakhstan’s growth has been correlated with oil and gas dynamics. Over the last two decades, Kazakhstan’s economy underwent a transformational growth process, as real GDP per capita multiplied by 2.5x (2000-2020). The early and mid-2000s saw higher than 8% GDP growth and a large reduction in poverty in the context of a global commodity boom. After a comparatively mild slowdown caused by the 2008-09 global financial crisis, growth rebounded, never returning to the peak reached in the early 2000s, but still outperforming most peers. After a second slowdown, mainly caused by the crash in global oil prices starting in 2014, Kazakhstan’s economy rebounded, again outpacing most peers by 2017. While its economy reeled from the COVID-19 crisis, Kazakhstan seemed better positioned than some other emerging economies at the end of 2021, although it came at a high fiscal cost. At the beginning of 2022, domestic political change and geopolitical instability made immediate growth prospects less predictable."