Kazakhstan’s industries report decline in capital investments

In January and February this year, the growth rate of capital investments was just 0.5%, compared to 7.9% during the same period last year. Despite a slight month-on-month acceleration (0.3 p.p.), the rate has declined in nearly all key sectors of the economy, according to Saltanat Igenbekova, an analyst at Halyk Finance. The construction sector reported the steepest decline in capital investment, down 50% compared to the same period in 2024.

Several sectors crucial to Kazakhstan’s economy also reported declines in capital investments, including mining (-26.6 %), agriculture (-49.4%), transportation (-9%) and manufacturing (-4%). As a result, the overall capital investment rate has dropped. However, some industries showed the opposite trend, reporting capital investment growth. These include the information sector (+19.2%), trade (+7.5%) and real estate (+4%).

Capital investment in the mining industry fell due to lower investments in the oil and gas sector (-39.3%). This industry accounts for nearly a quarter of total capital investments, the largest share among all industries. The finished metal products and non-metal sectors saw the sharpest declines within the manufacturing industry, dropping 67% and 61.3% year-on-year, respectively. At the same time, capital investments in the automotive and other vehicle manufacturing industries grew by 94.3% and 82.1%, respectively.

The current share of capital investments in GDP is about 15%, which is 8 percentage points below the government’s target of 23% by 2029. The Halyk Finance analyst believes this is another sign that Kazakhstan should shift away from its current resource-oriented economic model.

«This would require serious tax policy reforms to ensure macroeconomic stability by reducing dependence on oil prices, creating a fully market-oriented environment, promoting entrepreneurship, and attracting private investments in high-tech economic sectors,» Igenbekova said.

She also highlighted that the share of public funds in capital investment is three times higher than before, rising from 7% to 21%, while private investment has declined. Furthermore, even private investments often involve quasi-state businesses, making them effectively quasi-public funds.

This situation could lead to economic imbalances and pose additional risks to the state budget. According to Igenbekova, the ongoing decline in investment activity could hinder Kazakhstan’s economic growth, especially amid budgetary challenges. In 2024, capital investments totaled $38.8 billion, a 7.5% increase from 2023. However, in 2023, the growth rate was 13.7%, meaning the 2024 increase was nearly half that, declining by 6.2 percentage points. This marks another historic low after 2021, when the rate was 3.5%.