Our comprehensive assessment of Kazakhstan's operating environment and the outlook for its leading sectors are formed by bringing together a wealth of data on global markets that affect Kazakhstan, as well as the latest industry developments that could impact Kazakhstan's industries. This unique integrated approach has given us an impeccable track-record for predicting important shifts in the markets, ensuring you’re aware of the latest market opportunities and risks in Kazakhstan before your competitors.

Country Risk

Kazakhstan Country Risk

BMI View:

CORE VIEWS

  • Kazakh economic activity will slow in 2015 and 2016 as production issues at the Kashagan oil field hurt export revenues and private consumption is constrained by rising inflation. However, the outlook over our 10-year forecast period has improved, with the government committing USD5.5bn to promoting economic diversification, a crucial step in weaning Kazakhstan off its hydrocarbon reliance.

  • The increasing frequency of ethnic violence in southern Kyrgyzstan will continue to damage the country's security profile. This will in turn discourage long-term foreign investment and threaten the longevity of the government in Bishkek.

  • Tajikistan faces two significant security threats in the years ahead; the return of...

To read the full article Register for Free or Login

Kazakhstan Operational Risk Coverage (10)

Kazakhstan Operational Risk

BMI View:

Kazakhstan is a regional outperformer for Labour Market Risk in BMI's Operational Risk Index. The country has a high level of migrant workers, boosting the size of the labour force. A highly level of literacy, as well as low costs, means businesses will not struggle to hire from within the domestic workforce. However, risks are present in the form of relatively poor urbanisation rates for the country, as well as only a small percentage of the labour force with tertiary education. Taking these factors into consideration, we score Kazakhstan 65.3 out of 100 for Labour Market Risk, putting the country in first position in Emerging Europe, ahead of all of its immediate neighbours.

Kazakhstan has a strong history of education provision, and boasts a workforce with a 100% literacy rate. With the entirety of the workforce having at least basic numeracy skills, investors are unlikely to need to seek employees abroad, reducing...

To read the full article Register for Free or Login

Kazakhstan Operational Risk

Kazakhstan Crime & Security

BMI View:

Kazakhstan poses modest security risks to foreign business travellers, expatriates, and tourists. For the most part, the greatest risks to these groups are petty crime such as pick-pocketing and theft, rather than violent crimes. However, we believe that public security risks could increase once President Nursultan Nazarbayev, 74, leaves office. Nazarbayev has led Kazakhstan since the late Soviet era, and a potential power vacuum after his departure could increase political instability.

Terrorism is a relatively new phenomenon in Kazakhstan, which has seen a series of small-scale attacks in the last three years. There are concerns that the segments of the population could become radicalised by Islamic extremists from nearby countries. Kazakhstan's proximity to Afghanistan and Russia's North Caucasus - two hotbeds of Islamic militancy and extremism - exposes it to regional threats. We expect terrorism and political violence to become a more...

To read the full article Register for Free or Login

Kazakhstan Labour Market

BMI View:

Kazakhstan fares reasonably well with regards to labour market risks, with a high level of primary education boosting basic skills among the workforce, while low levels of unemployment point towards a developed labour market. The key risk to investors here is the poor quality of tertiary education in the country and declining secondary education enrolment rates, which could indicate a long-term decline in the quality of the available workforce. Overall Kazakhstan has a score of 61.1 out of 100 for Labour Market Risk, putting the country in 7 th position in Emerging Europe, ahead of all of its immediate neighbours with the exception of Russia, while globally Kazakhstan sits in a competitive 34 th position.

High employment rates and a good volume of female labour force participation help to boost Kazakhstan's score for size of labour force, which at 58.9 puts the country in a very positive 2 nd place in the...

To read the full article Register for Free or Login

Kazakhstan Logistics

BMI View:

Kazakhstan's transport network presents potential investors with some substantial risks, with low road density and long rail transit times creating extensive delays when importing and exporting goods. Although the export market is well developed, it is mainly focused on oil and oil related products, and as a result the logistics network, particularly the ports, are largely unsuitable for the transport of other goods. For these reasons, Kazakhstan's score in the Logistics Risk Index is 41.5. This places it in 23 rd position in the Emerging Europe market, and in 112 th position globally. While it fares better than its neighbours in Central Asia, particularly Uzbekistan and Kyrgyzstan, Kazakhstan still has a long way to go if it is to achieve its aim of being a key transit point between Asia and Europe.

Covering a vast expanse of 2,724,900 square kilometres, much of it desert, Kazakhstan contains difficult terrain to cross...

To read the full article Register for Free or Login

Kazakhstan Trade & Investment

BMI View:

Kazakhstan's trade and investment environment presents potential investors with some substantial risks, with corruption endemic throughout the government and judiciary systems and poor legal enforcement limiting protection of intellectual property. While exports are strong, the import market is limited and there are extensive bureaucratic barriers to operating in the country. Overall, Kazakhstan has a Trade and Investment Market Risks score of 49.45, ranking 22 nd in Emerging Europe and 80 th globally.

Kazakhstan's export market is driven largely by the lucrative oil industry, which accounts for more than 70% of total exports; total exports currently account for over 51% of GDP. Moving forward, the government is keen to diversify the export market, through a range of programmes contained under the National Strategy 2030 including introducing new manufacturing businesses to the country. FDI is relatively high in...

To read the full article Register for Free or Login

Kazakhstan Industry Coverage (15)

Agribusiness

Kazakhstan Agribusiness

BMI View:

BMI View: Bad weather right at the point of harvest has significantly reduced the prospects for the 2014/15 wheat crop. Quality has been affected and export earnings as well as volumes are likely to be compromised as a result. Other grains have fared better and we do not foresee any problems with local availability of animal feed. Poultry, pork and beef farmers continue to be among the biggest beneficiaries of the government's plans to modernise the agricultural sector and we see strong long-term growth potential for the livestock industry. The dairy segment will demand more significant structural reforms and substantial investment in processing and storage infrastructure for us to regard it with similar optimism.

...

To read the full article Register for Free or Login

Autos

Kazakhstan Autos

BMI View:

BMI View:  BMI's outlook on auto production and sales in Kazakhstan and Uzbekistan remains positive, despite a slowdown in sales figures in the first eight months of 2014. Both countries boast solid macroeconomic fundamentals and both are seeing strong demand for cars from their citizens.

Turning to production first, Kazakh auto production looks set for strong growth over BMI's five-year forecast period to 2017. This reflects new production plans by carmakers  Toyota Motor and Russia's AvtoVAZ and Kazakh AutoBIPEK.

Kazakh auto production looks set for strong growth over BMI's forecast period to 2018. We ...

To read the full article Register for Free or Login

Commercial Banking

Kazakhstan Commercial Banking

BMI View:

...
Commercial Banking Sector Indicators
Date Total assets Client loans Bond portfolio Other Liabilities and capital Capital Client deposits

To read the full article Register for Free or Login

Defence & Security

Kazakhstan Defence & Security

BMI View:

BMI View:  At present, Kazakhstan and the other four Central Asia countries, Turkmenistan, Tajikistan, Uzbekistan, and Kyrgyzstan have limited defence budgets, yet numerous requirements. While BMI expects these budgets to increase incrementally over the coming years, BMI also expects the budgetary and underdevelopment challenges to limit those increases considerably. These countries face numerous internal and external security challenges, including border disputes, criminality, and domestic and transnational terrorism.

BMI expects Kazakhstan's defence spending to have reached USD2.4bn by the end of 2014 and USD2.6bn by the end...

To read the full article Register for Free or Login

Food & Drink

Kazakhstan Food & Drink

BMI View:

BMI View:   Whilst the devaluation of the teng in early 2014 and elevated consumer price inflation (forecast to stay at over 8% in 2015) will impact on household spending, private consumption is set to remain the primary driver of Kazakh economic growth and this keeps the outlook positive for spending on food and drink. Future drivers of growth will be portfolio expansion by major manufacturers and importers, including strong marketing and promotional campaigns targeting younger and more aspirational consumers. The Kazakh government's recently announced financial incentive, offering up to 30% cash back to foreign investors in newly created firms, should boost investment into domestic companies in a country that is already an attractive destination for foreign investment.

Headline Industry Data (local currency):

    ...

To read the full article Register for Free or Login

Freight Transport

Kazakhstan Freight Transport

BMI View:

Following a year that saw increasing volumes across all modes of Kazakhstan's freight transport sector, BMI believes 2015 will signal further growth in line with the country's macroeconomic outlook.

Total trade is projected to pick up with our Country Risk desk forecasting a year-on-year (y-o-y) increase of 6.4% in 2015 following an estimated growth of 5% in 2014.

The most potential for growth and development in Kazakhstan's freight transport sector remains in the country's rail freight market. The country's exports are concentrated on the freighting of bulk products, namely oil and grain. The country's rail freight sector has developed to cater for these needs and will continue to do so in the longer term, as both commodities look set to continue dominating Kazakhstan's trade sector.

Rail freight is also in high demand as Kazakhstan develops its role as a conduit for...

To read the full article Register for Free or Login

Infrastructure

Kazakhstan Infrastructure

BMI View:

BMI View:   The Kazakh infrastructure sector is facing some challenges stemming from sluggish economic growth due to falling oil revenues, a weakened Russian rouble and a devaluated tenge that will have particularly severe implications for the residential and non-residential sub-sector. Nonetheless, the preparation for the 2017 World Expo and associated governmental funding programmes are boosting investment, especially in the transport sub-sector, while the energy sub-sector continues to profit from the countries growing natural resource base, however slightly impeded through decreasing oil prices. 

Key Trends And Developments

  • ...

To read the full article Register for Free or Login

Insurance

Kazakhstan Insurance

BMI View:

BMI View : Kazakhstan's insurance sector is small and is dominated by its non life lines of business. The immaturity of the market is to some extent a reflection of its consumer base, divided between large corporate clients and private individuals who have yet to show an appetite for voluntary products, particularly life insurance. Through the forecast period we do not expect other than modest growth across all insurance segments.

We believe that Life business will continue to show very modest growth through to 2019, but starting from a low base it will continue to be overshadowed by the non-life market. As disposable income rises consumers appear to be more interested in purchasing health insurance than life products and we anticipate that this sub sector will outperform the non life sector as a whole.

Our view is that there will be a significant...

To read the full article Register for Free or Login

Mining

Kazakhstan Mining

BMI View:

BMI View:  We expect consistent growth in Kazakhstan's mining industry through 2018, averaging 2.5% on average per annum and reaching a value of USD37.6bn. Growth will be derived from increasing output of both industrial and precious metals, including coal, copper, gold and iron ore, which together account for the bulk of the value of Kazakhstan's mining industry. We forecast copper output to grow the fastest in percentage terms through to 2018.

Kazakhstan has one of the richest mineral reserves in the world, and is in the top ten in size for a number of major minerals. It has the potential to overtake current major mineral producers but needs substantial investment from foreign companies which have the necessary capital and technology to develop its deposits. Poor...

To read the full article Register for Free or Login

Oil & Gas

Kazakhstan Oil & Gas

BMI View:

Although prolonged delays at the Kashagan field are continuing to suppress Kazakhstan's huge underground potential, we maintain a positive longer-term outlook for the country's oil and gas sector, which is expected to see its oil and gas production levels nearly double over our forecast period to 2023.

...
Headline Forecasts (Kazakhstan 2012-2018)
2012 2013 2014f 2015f 2016f

To read the full article Register for Free or Login

Petrochemicals

Kazakhstan Petrochemicals

BMI View:

Russia's economic problems stemming from its trade war with the West are having a negative impact on the Central Asian petrochemicals market with Kazakhstan's imports dropping sharply in 2014. BMI's latest Kazakhstan and Uzbekistan Petrochemicals Report anticipates further falls in imports as both states prepare for a surge in capacity in 2016.

Both Kazakhstan and Uzbekistan will have sufficient production to cover domestic needs with a surplus likely to stimulate polymers conversion and boost exports. The Central Asian market is robust and growing fast, providing a sound basis for new petrochemicals capacities.

Most consumption will be focused on finished products with a lack of domestic plastics converters to fulfil demand. This could change as domestic petrochemicals capacities evolve, enabling local sourcing of cheap raw material for the manufacturing of end products.

  • The ongoing...

To read the full article Register for Free or Login

Pharmaceuticals & Healthcare

Kazakhstan Pharmaceuticals & Healthcare

BMI View:

BMI View: Plans to boost government spending on healthcare will be positive for the pharmaceutical industry as well as other participants in the healthcare sector. Over the longer term, the introduction of compulsory health insurance will create a large pool of funding for further growth. However, a key risk to our outlook is oil prices and their effect on Kazakh government revenues.

Headline Expenditure Projections

  • Pharmaceuticals: KZT273.92bn (USD1.80bn) in 2013 to KZT335.18bn (USD1.84bn) in 2014; +22.4% in local currency terms and 2.3% in US dollar terms.

  • Healthcare: KZT1,487.03bn (USD9.77bn) in 2013 to KZT1,775.11bn (USD9.75bn) in 2014; +19.4% in local currency terms and -0.2% in US dollar terms.

    ...

To read the full article Register for Free or Login

Power

Kazakhstan Power

BMI View:

BMI View: We expect healthy growth in Kazakhstan's power sector over BMI's 10-year forecast period to 2023, in terms of generation and consumption. Coal will retain its dominance, accounting for over 80% of the country's energy generation by 2023. However, non-hydro renewables will grow rapidly, with a slew of foreign-financed wind and solar projects in the pipeline. The government also plans to restart the exploitation of nuclear energy, helped by Kazakhstan's vast uranium wealth. Power production will comfortably meet demand, with Kazakhstan's dependence on energy imports decreasing over the 10-year period. For much of the forecast period, system losses will be considerable, but steady investment in transmission and distribution...

To read the full article Register for Free or Login

Telecommunications

Kazakhstan Telecommunications

BMI View:

BMI View: The return of MTS to Uzbekistan is a strong indicator for the potentially high rewards that the Central Asian region offers. Uzbekistan's low penetration and high population size means it is the most attractive market from an organic growth outlook. Russian telecoms operator Multiregional Transit Telecom (MTT) has also entered the region as an mobile virtual network operator (MVNO); the first of its kind it will be able to tap into the large numbers of migrant workers living in Russia, Tajikistan, Uzbekistan and Kyrgyzstan. Demand will...

To read the full article Register for Free or Login

Water

Kazakhstan Water

BMI View:

BMI View: This quarter we have revised our forecasts due to the release of additional historical data, and expanded our coverage to include non mains consumption, desalination production, together with additional wastewater and consumption revisions to factor in the new content. Overall we take a positive outlook for the services sector, although we note that heavy water consuming industries will continue to have difficulties in many regions owing to rising desertification.

The greatest issue in Kazakhstan continues to be that of water scarcity in many regions. However, although there are some developments in the more stringent billing for and metering of water consumption, over the longer term we believe the country will need to look to alternative water resources, particularly recycled water. However, the improvement of...

To read the full article Register for Free or Login