As the world’s economic woes are broadcast across the media and governments and, financial institutions battle the potential recessions some developing nations are seemingly faring better. The Covid pandemic and war in the Ukraine have, undoubtedly, been the cause of many worldwide issues but how are some countries and regions more able to weather the storm than others?
In central Asia for example, the growth of the Kazakhstan economy did slow in 2022. It reached 3.4% year-on-year in the first six months, from 4.1% in 2021. In 2023-24, GDP growth is expected to accelerate to 3.5 and 4.0%, according to the World Bank – such projections would be warmly embraced by many Western governments. The current situation builds on impressive economic growth from the early 2000’s driven by the first generation of market-oriented reforms, abundant mineral resources extraction, and strong foreign direct investment. Sustained economic growth has transformed the country into an upper middle-income economy, raising living standards and, as a result, reducing poverty. Indeed, Kazakhstan is still seen as a great place to invest for foreign organisations.
The slight recent slowing of economic growth has made some people question the resource-based and state-led growth model, and they wonder if this raises the risk that Kazakhstan could become stuck in the “middle-income trap.”
Individuals have aspired to become the ‘middle class’ – this is particularly evident in the cities, with property and vehicle ownership skyrocketing in the last fifteen years. Although Astana the ‘new’ capital is a unique example, here the building boom and investment in infrastructure has not always been able to outpace the population growth and number of vehicles on the roads. Local people are judgemental about the development of the city – “this road is only just finished and already we are sitting in a traffic jam” one taxi driver said to me on a slow journey from the airport – however I had just come from London and had a similar experience! There has been investment in public transport but people still point to the skeletal structure of a light rail system that was supposed to be ready for the EXPO that took place in 2017. Other issues are the number of schools and facilities being built to cope with an exponential influx of people from surrounding regions but interestingly this need is partly being met by local benefactors actually building schools and then donating them to the city.
In Almaty, the country’s second city, there are also traffic jams and regular complaints across social media about the slow progress, pollution and how some social projects such as pedestrianisation of some streets have not alleviated the situation as promised. But the city still feels very European and there is a ‘greening’ revolution going on! – sometimes the change seems slow if you are there day to day but as a regular visitor I have seen positive change in both cities.
As the population seeks greater personal status, the state needs to provide the infrastructure for this to happen. There are many more diagnostic systems in place to identify real needs and as a result it is recognised that Kazakhstan needs to strengthen competition and human capital, and improve public sector and state owned enterprises performances. The country is actively continuing to initiate reforms in fuel and energy pricing, strengthen social protection, and invest in climate adaptation. The forthcoming Elections give the populace an opportunity to directly comment on this with all candidates identifying economic development as a key issue. Whatever the outcome of the election there is transparency of the issues and systems and plans to help solve them.
As I travel back to Kazakhstan I obviously have a nostalgia and wish for the way things were but it is very interesting that I am experiencing new things and a willingness of people to improve what was there – for example, a small restaurant in Astana, that we used for an escape, has now become quite ‘posh’ with an investment in decoration and expanded service but thankfully the Shashlik is still excellent !