Kazakhstan’s real sector development in 2022

From January to November, the economy grew only by 2.7 percent and foreign trade turnover grew by 34 percent, reaching $111 billion.

According to the data from the Kazakh Ministry of Industry and Infrastructure Development, the volume of industrial production, compared to the same period in 2021, amounted to 101.4 percent. The growth was due to an increase in production volumes in the manufacturing (4.2 percent), metallurgy (3.9 percent), machine-building (8.9 percent) and light industries (6.9 percent), as well as in the mining of nonferrous metal ores (5.9 percent). At the same time, the mining industry showed a decline of 0.9 percent.

This year saw the launch of major investment projects in key sectors, such as industry, agriculture, oil and gas production, and logistics.

Industry

This year, enterprises were launched in such sectors as food, light and chemical industry, mechanical engineering, pharmaceuticals, and oil refining.

According to the data from the Kazakh government, 160 projects worth 2 trillion tenge were launched this year, creating 15,700 jobs. These projects are part of the national pool of investment projects.

Once these projects reach their designed capacity, their aggregate production will amount to nearly 1.7 trillion tenge, including 1.1 trillion tenge for export and 0.6 trillion tenge for import substitution.

One of the key projects is the polypropylene production plant in the Atyrau region, with a capacity of 500,000 tons per year. Domestic polypropylene needs are estimated at 50,000 tons per year.

Photo: primeminister.kz

The project was launched in November 2022 during the working visit of President Kassym-Jomart Tokayev to the region. This is the first project of KazMunayGas national company in the field of deep processing of hydrocarbon raw materials.

The project is aimed at diversifying the economy and moving away from the raw-material orientation of exports. The gas chemical cluster and the planned production of basic polymer raw materials are expected to reduce existing import dependence and drive the development of domestic business in the other chain of end products.

The first domestic tire production plant with an annual capacity of 3.5 million multi-purpose tires started operating in the Saran industrial zone in December 2022. It is expected to cover the needs of domestic car makers fully and employ more than 1,100 specialists. Investments in the project amounted to 171 billion tenge.

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The plant will reach its design capacity in 2024.

«This plant will contribute both to the progress of our industry and to the development of single-industry towns. Over a thousand residents of Saran will be employed in this production. It should be noted that this is the first car tire plant in Kazakhstan. It will cover the needs of both the automotive industry and car enthusiasts,» said First Deputy Prime Minister Roman Sklyar.

Among other major projects launched in Kazakhstan in 2022 are an aluminum cans and lids production plant with an annual capacity of 500 million pieces per year in Shymkent, an oil extraction plant in the East Kazakhstan region, a plant for producing pump rods and couplings in the Mangystau region with an annual capacity of 650,000 tons, covering 78 percent of domestic demand, and mineral fertilizers production in the Zhambyl region with a capacity of 1.5 million tons a year.

In 2022, the Kazakh government also adopted a program of development of domestic value and export-oriented productions till 2026. Its main goal is to saturate the domestic market with competitive domestically produced goods with subsequent exports. In general, it is planned to produce 761 goods under the program, which in the future is expected to increase non-resource exports by nearly $15 billion.

Relocation of foreign companies to Kazakhstan

The government also continued its work to support the relocation of major foreign companies from Russia and Belarus to Kazakhstan.

At the press briefing on December 28, Kazakh Foreign Ministry’s spokesperson said a list of 362 major companies from 37 countries has been formed. Currently, 21 companies have relocated to Kazakhstan, 13 are being worked on, and an active negotiation process is underway for another 28 companies.

One of the companies that relocated its office to Kazakhstan is Honeywell. It relocated its Central Asia office from Moscow to Almaty and launched the production of gas analyzers in Atyrau and a new assembly facility in Almaty for advanced automation and security equipment for complex industrial plants in oil refining, petrochemical, energy, and mining.

The new facilities are part of Honeywell's strategy to expand localization in Kazakhstan.

Ural Motorcycles has also relocated some of its production facilities from Irbit and launched production in Petropavlovsk in northern Kazakhstan.

Weir Minerals, a British transnational company, opened a service center in Almaty in September 2022 to assemble and rebuild pumping equipment, hydro cyclones, and valves. The production center, with a total area of ​​3,300 square meters, is located in the Almaty industrial zone.

The Dutch company Koppert plans to open a plant to produce bio-fertilizers and plant protection products in Kazakhstan and the German Knauff - a plant to produce gypsum board.

Agriculture

Agriculture is a key sector for Kazakhstan. Nearly 42 percent of the population lives in rural areas, and close to 14 percent of the country’s economically active population is employed in the industry.

According to the results of 11 months of 2022, the agriculture sector showed the highest growth rate. The gross production volume increased by 8.5 percent and amounted to 8.8 trillion tenge. The sector, however, also suffered from the volatility in global food markets, the result of the ongoing geopolitical developments in the region.

To minimize possible risks, the amount of funding for spring field and harvest work has been increased twice from 110 billion to 220 billion tenge. An additional 40 billion tenge was allocated to the leasing of agricultural machinery through Zhasyl Damu, expanding the availability of agricultural machinery for farmers.

This year also witnessed one of the highest grain yields for the past ten years. At an average yield of 14.2 quintals per hectare, 22.8 million tons of grain were threshed in bunker weight, 26 percent more than last year. More than 80 percent of the harvested grain is of high quality.

In 2022, 227 investment projects worth 214 billion tenge were launched. 5.2 million hectares of agricultural land has been returned to state ownership and in 2023, it is planned to return another 5 million hectares.

Transport and logistics

Transport and logistics is another important area for Kazakhstan, where it offers ample opportunities, considering its strategic location between Asia and Europe.

The government developed a plan until 2030, which provides measures to increase the speed of passenger and cargo delivery, introduce digitalization and intelligent control systems, develop missing transport connections between centers of economic activity and settlements, and increase the capacity of international transit-transport corridors, and logistics terminals.

The construction of the second track of the 836-kilometer Dostyk-Moiynty railway section began in the fall. Darbaza-Maktaaral (106 kilometer, 2024-2025), Bakhty-Ayagoz (270 kilometer, 2024-2025), and Obvodnaya Almaty (73 kilometer, 2023-2024) are under development.

As part of developing international transport routes, in 2022, Kazakhstan signed joint road maps for 2022-2027 with Azerbaijan, Turkey, and Georgia to synchronously eliminate bottlenecks and strengthen the Trans-Caspian international transport route. Kazakhstan plans to increase the capacity of Aktau and Kuryk ports, build a container hub and add ten new ferries to the merchant fleet.

Overall, in 2022, the global economy endured a tough year and is expected to face a recession this year. The latest World Economic Outlook, released in October by the International Monetary Fund, lowered its global growth forecast for 2023 to 2.7 percent. It also forecasts the countries that account for more than one-third of global output to contract.

Despite a grim outlook, in 2023, Kazakhstan is set to continue its economic course and step up efforts to foster the development of high-value-added industries, reduce monopolies in the economy, fight rising inflation, and minimize the adverse impact of external shocks yet to come.

Written by Assel Satubaldina