Event
On December 11th a military conscript accused of killing fellow border guards at a post near the Sino-Kazakh frontier was found guilty of mass murder and sentenced to life imprisonment.
Analysis
Vladislav Chelakh was convicted of the murder of 15 people (14 border guards and one national park ranger) who were found dead in May 2012 at the Arkankergen border guard post in south-east Kazakhstan, near the frontier with China. Mr Chelakh, aged 19 at the time of the incident, was found guilty on eight other charges, including desertion, damaging military property and theft of weapons. Mr Chelakh initially confessed to the murders and described his motive as revenge for bullying by fellow soldiers, which is common in Kazakhstan's conscripted armed forces. He later retracted his confession, saying that he had been coerced by investigators and that his unit had been attacked by unknown assailants. A senior member of the border services, Director Major-General Nurzhan Myrzaliyev, resigned over Mr Chelakh's case.
There was widespread scepticism in Kazakhstan about Mr Chelakh's guilt, and various theories have been put forward to explain the incident, such as an extremist attack on the post, or that the killings were perpetrated as a means of discrediting the president, Nursultan Nazarbayev. However, the balance of evidence suggests that Mr Chelakh was guilty of the crime, which highlights the poor state of discipline in Kazakhstan's armed forces. Bullying is a serious problem in the military: in June, 11 conscripts deserted the Tersayryk unit in north-east Kazakhstan to protest against abuse by fellow soldiers, prompting the arrest of their commander. In the wake of Mr Chelakh's case, the authorities have not shown a serious willingness to tackle bullying within the armed forces. It therefore seems likely that bullying and discipline problems will remain endemic in the military for the foreseeable future, undermining the armed forces' combat capability.
December 14, 2012
Political outlook: Political forces at a glance
Current government: Kazakhstan is a republic in which the president has extensive powers. The president appoints the prime minister, who presides over the Council of Ministers (the government). The incumbent president, Nursultan Nazarbayev, has been in power since 1989. Following a snap election on April 3rd 2011, Mr Nazarbayev was re-elected for a five-year term (previous legislative amendments reduced the presidential term to five years from seven). Mr Nazarbayev competed against three virtually unknown candidates and received 95.5% of the vote. Constitutional changes approved by parliament in 2007 removed all term limits on Mr Nazarbayev, paving the way for him to remain in office for life. A parliamentary election was brought forward from August to January 2012, bringing the number of parties in parliament to three.
| Majilis election, Jan 15th 2012 | ||
| Share of vote (%) | Seats (no.) | |
| Nur Otan | 81.0 | 83 |
| Ak Zhol | 7.5 | 8 |
| Communist People's Party of Kazakhstan | 7.2 | 7 |
| National Social Democratic Party | 1.7 | 0 |
| Total incl others | 100.0 | 98 |
| Source: Organisation for Security and Co-Operation in Europe, Election Observation Mission Final Report. | ||
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Next elections: The next parliamentary election is scheduled for 2017 and the next presidential election is scheduled for 2016.
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June 22, 2012
Official name
Republic of Kazakhstan
Legal system
On December 16th 1991 the Republic of Kazakhstan became the last of the former Soviet republics to declare its independence following the collapse of the Soviet Union. Parliament approved amendments to the 1995 constitution in 2007, ostensibly aimed at redistributing the balance of power away from the presidency in favour of the legislature
National legislature
Bicameral: 107-seat lower house (Majilis), 47-seat upper house (Senate)
Electoral system
Universal suffrage over the age of 18 for the presidential and Majilis elections; senators are partly elected by the regions and partly appointed by the president
National elections
April 2011 (presidential); January 2012 (Majilis); August 2011 (one-half of the Senate). Next elections: 2016 (presidential); 2017 (Majilis); 2014 (one-half of the Senate)
Head of state
The president, Nursultan Nazarbayev, first elected in December 1991 and re-elected in January 1999, December 2005 and April 2011
National government
Council of Ministers, headed by a prime minister, who is appointed by the president. In practice, Mr Nazarbayev exercises total control
Main political parties
Pro-presidential: Nur Otan (Light-Fatherland). Opposition: Communist Party of Kazakhstan (KPK); Ak Zhol (Bright Path); Republican People's Party of Kazakhstan (RNPK); Party of Patriots; Communist People's Party of Kazakhstan (KNPK). In October 2009 Azat (Freedom) and the National Social Democratic Party (OSDP) merged to form OSDP Azat (Freedom National Social Democratic Party)
Prime minister: Serik Akhmetov
Deputy prime ministers:
Asset Isekeshev
Erbil Orynbayev
Kairat Kelimbetov
Krymbek Kusherbayev
Council of Ministers
Agriculture: Asylzhan Mamytbetov
Culture & information: Darkan Mynbai
Defence: Adilbek Dzhaksybekov
Economic development & trade: Yerbolat Dosayev
Economic integration: Zhanar Aytzhanova
Education & science: Bakytzhan Zhumagulov
Finance: Bolat Shamishev
Foreign affairs: Yerlan Idrisov
Health: Salidat Kairbekova
Internal affairs: Kalmukhanbet Kasymov
Industry & new technologies: Asset Isekeshev
Justice: Berik Imashev
Labour & social protection: Serik Abdeniv
Oil & gas: Sauat Mynbayev
Transport & communications: Askar Zhumagaliyev
Head of the presidential administration
Karim Masimov
Speakers of parliament
Kayrat Mami (Senate); Nurlan Nigmatullin (Majilis)
Central bank chairman
Grigory Marchenko
November 07, 2012
Outlook for 2013-17
Review
November 07, 2012
Fact sheet
| Annual data | 2011 | Historical averages (%) | 2007-11 |
| Population (m) | 16.7 | Population growth | 1.6 |
| GDP (US$ bn; market exchange rate) | 183.1 | Real GDP growth | 5.6 |
| GDP (US$ bn; purchasing power parity) | 217.2 | Real domestic demand growth | 6.4 |
| GDP per head (US$; market exchange rate) | 10,982 | Inflation | 10.1 |
| GDP per head (US$; purchasing power parity) | 13,028 | Current-account balance (% of GDP) | 0.5 |
| Exchange rate (av) Tenge:US$ | 147 | FDI inflows (% of GDP) | 9.6 |
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Background: Nursultan Nazarbayev has ruled Kazakhstan since 1989, before the country declared independence from the Soviet Union in 1991. He was elected president of independent Kazakhstan in December 1991, and a referendum in 1995 extended his term until December 2000. An early election in January 1999 returned him to office for a seven-year term; he was re-elected in December 2005 for another seven years. Following a snap election in April 2011, he was re-elected for a further five-year term (previous legislative amendments reduced the presidential term to five years).
Political structure: Kazakhstan is a presidential republic where, despite the separation of powers in principle, the president wields almost total control over all three branches of government and dictates national policy priorities. Mr Nazarbayev has sidelined the bicameral parliament, and has kept the opposition under strict scrutiny. A parliamentary election was held in mid-January 2012 (brought forward from August) for the Majilis (the lower house of parliament). In addition to Nur Otan (Light-Fatherland), a pro-presidential vehicle, two other parties were allowed in to parliament, although both are tame pro-government organisations. Nonetheless, there is some evidence that the elites are increasingly dissatisfied with limited political influence.
Policy issues: A sharp fall in oil prices in late 2008, which lasted until the second quarter of 2009, highlighted Kazakhstan's overdependence on oil. Improving the stability of the banking sector and countering the effects of another period of global economic uncertainty in 2012 will be the main lines of government policy in the short to medium term. Diversification away from hydrocarbons will be a longer-term priority. The economic slowdown in 2009 reinforced the government's interventionism, and the state will continue to promote favoured enterprises, obstructing the free functioning of market mechanisms.
Taxation: A new tax code came into effect on January 1st 2009, which cut the rate of corporate tax from 30% to 20% and lowered the rate of value-added tax (VAT) from 13% to 12%. Personal income tax is levied at 10%. A social tax paid by employers is set at 11% of the employee's wage. A withholding tax is levied at a rate of 20% on payments made to non-residents, and VAT applies to import values, inclusive of customs and excise duties.
Foreign trade: In 2011 goods exports reached US$89bn and imports amounted to US$41bn. Russia remains a leading source of imports and market for exports. This is partly the result of the difficulty in moving up the value-added ladder, which makes Kazakhstan unable to compete in Western markets. Instead, the bulk of Kazakh exports to the West consist of raw materials, particularly oil and metals.
| Major exports 2011 | % of total | Major imports 2011 | % of total |
| Mineral products | 77.8 | Machinery & equipment | 41.1 |
| Metals | 13.2 | Mineral products | 13.8 |
| Chemicals | 3.7 | Chemicals | 13.1 |
| Food products | 2.1 | Metals | 9.9 |
| Leading markets 2011 | % of total | Leading suppliers 2011 | % of total |
| China | 18.5 | Russia | 42.8 |
| Italy | 17.1 | China | 13.2 |
| Russia | 8.5 | Germany | 5.5 |
| France | 6.1 | Italy | 4.6 |
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November 07, 2012
Data and charts: Annual trends charts
November 07, 2012
Kazakhstan: Country outlook
FROM THE ECONOMIST INTELLIGENCE UNIT
POLITICAL STABILITY: The president, Nursultan Nazarbayev, has been in power since before the collapse of the Soviet Union, and Kazakhstan has never held free and fair elections. The political shift under way in the Middle East and North Africa (MENA) has raised the question of whether a similar process could take hold in the former Soviet Union. There are similarities between Kazakhstan and the MENA countries. They have been subject to long rule by autocratic leaders and suffer from entrenched corruption. Institutions have been corroded by the effects of oil-based development. However, the Kazakh economy is more dynamic, and the regime has made some improvements to living standards. Employment has grown steadily since 2010, reducing the risk of social unrest. Although economic growth over the next few years will be slower, it should remain sufficient for Mr Nazarbayev to maintain patronage networks. One intention behind the government's "People's IPO" (initial public offering) privatisations is to try to widen the support base of the regime by giving more people a stake in the country's wealth.
ELECTION WATCH: A presidential election was held in April 2011. Mr Nazarbayev received 95.5% of the vote. Several of the main opposition parties decided not to field candidates, citing concerns over the electoral process. Since Kazakhstan gained independence, no election has been judged free or fair by credible international observers. Although Mr Nazarbayev enjoys some level of support, or at least acquiescence, among the electorate, administrative resources played an important role in his re-election for a further term in office. The next presidential election is due in 2016, and Mr Nazarbayev has indicated that he will stand. If he does, he is expected to win. A parliamentary election was held in January 2012 for the Majilis (the lower house). Mr Nazarbayev's party, Nur Otan (Light-Fatherland), won 81% of the vote. Two other groups passed the 7% threshold to obtain seats in parliament. However, their entrance into parliament will not bring any substantial changes in policymaking or implementation, as both are tame pro-government parties. The next parliamentary election is scheduled for 2017.
INTERNATIONAL RELATIONS: China will become an increasingly important energy partner over the forecast period, as it wants to secure greater access to Central Asian hydrocarbons, and Kazakhstan wants to diversify its export routes. Nonetheless, links with Russia will remain strong. Kazakhstan established a customs union with Russia and Belarus in 2010, and this is gradually taking effect. From January 1st 2012 a common economic space was established, enabling the free flow of people, services and capital, in addition to goods. Membership of the World Trade Organisation (WTO) is being negotiated separately by the customs union members, and could take place in 2013 for Kazakhstan. In 2010 Kazakhstan became the first member of the Commonwealth of Independent States (CIS) to chair the Organisation for Security and Co-operation in Europe (OSCE), despite concerns over its poor record on political freedom and human rights. In 2013-17 the country will aim to raise its international profile further.
POLICY TRENDS: The government will focus on expanding output of energy and minerals, and may push ahead with the construction of a fourth oil refinery. The authorities will encourage economic diversification. Implementation of this programme began in 2010, and will be backed by investment in infrastructure and training. The authorities hope to diversify the economy partly by attracting foreign investment into areas outside the natural resources sector. However, the success of this approach is likely to be hindered by contradictory policy imperatives, including the move since the crisis of 2008-09 towards increasing the government's role in the economy, and the policy of domestic privatisation in the form of the People's IPO, which began in November. This chimes with a return to favouring some industries over others and "picking winners", which could hinder private enterprise, fail to enthuse foreign investors and hamper efforts to reduce corruption.
ECONOMIC GROWTH: Real GDP grew by 7.5% in 2011, according to the Statistics Agency of the Republic of Kazakhstan (SARK), compared with 7.3% in 2010. The services sector grew rapidly as domestic demand climbed. After a drought in 2010, agricultural output soared by more than one-quarter. Manufacturing was the best performer in industry. However, industrial and export expansion overall was held back by mining, where output stagnated, in part owing to industrial disputes.
INFLATION: Average annual consumer price inflation rose to 8.3% in 2011 from 7.1% in 2010, breaching the upper limit of the NBK's inflation target band of 6-8%. Food price inflation had followed a disinflationary trend since September 2011, falling from a peak of 13.6% in August 2011. However, food prices started to rise in August 2012, and climbed by 4.7% year on year in October, ending the disinflationary trend. Food prices will continue to rise in the remainder of 2012, owing to the impact of a severe drought on the grain harvests of Kazakhstan and other grain producers in the CIS. Nonetheless, the weaker economic outlook at home and abroad will help to dampen inflationary pressures, and The Economist Intelligence Unit estimates annual average inflation of 5.2% in 2012. The impact of the poor grain harvest will continue to be felt in the initial months of 2013. The outlook for the global economy will begin to improve in 2013; combined with a jump in domestic oil production when Kashagan comes on stream, this will put upward pressure on prices. Such pressures should weaken modestly in the later part of the forecast period, in tandem with slowing inflation in the CIS and a modest deceleration in economic growth after a strong performance in 2013. A potential risk to the inflation forecast is a sustained fall in oil prices: such a deterioration in the terms of trade would dampen domestic demand growth and so reduce pressure on goods prices in the home market. It could also reduce the transport costs of domestic trade.
EXCHANGE RATES: The tenge appreciated only modestly against the US dollar in 2011, in part as the US currency strengthened on international markets after April. In addition, the authorities remained wary of allowing the currency to appreciate too strongly, for fear of harming the competitiveness of non-oil companies. In mid-2012 the tenge came under modest depreciation pressure, triggered by a drop in global oil prices, which fell below US$100/b (although they have since rallied), and to strong downward pressure on the Russian rouble. In response, the governor of the National Bank of Kazakhstan (NBK, the central bank), Grigory Marchenko, felt obliged to emphasise that the tenge would not be devalued. We estimate an average exchange rate of Tenge149.1:US$1 in 2012.
EXTERNAL SECTOR: According to the NBK, in 2011 the current-account surplus rocketed to US$14.1bn (equivalent to 7.7% of GDP). The large increase was driven by strong growth in the trade surplus, which rose to US$47.3bn, from US$28.7bn in 2010, as global metals and energy prices rose sharply. However, the expansion of the external surplus was kept in check by the simultaneous rapid growth of debits on the income account, where the shortfall widened to more than US$26bn. The largest part of these debits represents repatriated earnings on foreign investment in Kazakhstan, but payments to foreign workers were also substantial.
December 01, 2012
Country forecast overview: Highlights
Country forecast overview: Key indicators
| Key indicators | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 |
| Real GDP growth (%) | 5.5 | 5.1 | 6.7 | 5.6 | 4.9 | 4.7 |
| Consumer price inflation (av; %) | 5.2 | 6.9 | 7.6 | 6.4 | 5.8 | 5.6 |
| Budget balance (% of GDP) | -2.6 | -1.8 | -1.3 | -0.6 | -0.4 | -0.4 |
| Current-account balance (% of GDP) | 6.5 | 4.2 | 5.7 | 5.9 | 5.3 | 4.1 |
| Short-term T-bill rate (year-end; %) | 1.6 | 2.0 | 2.3 | 2.5 | 2.5 | 2.5 |
| Exchange rate Tenge:US$ (av) | 148.99 | 149.88 | 147.99 | 146.22 | 144.01 | 141.90 |
| Exchange rate Tenge:€ (av) | 191.27 | 189.23 | 185.35 | 180.95 | 181.45 | 178.47 |
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November 07, 2012
Land area
2,717,300 sq km
Population
16.2m (December 31st 2010)
Main towns
The capital was moved from Almaty to Astana (formerly Akmola) on December 10th 1997
Population in '000 (1999 census)
Almaty: 1,129
Karaganda: 437
Shymkent: 360
Astana: 313
Ust-Kamenogorsk: 311
Pavlodar: 301
Semipalatinsk: 270
Petropavlovsk: 204
Climate
Continental. Average temperature in Astana in winter: -18°C; in summer: 20°C. Average temperature in Almaty in winter: -8°C; in summer: 22°C
Languages
Kazakh is the state language. Russian is the most widely spoken language and is the de facto language of administration
Weights and measures
Metric system
Currency
Tenge. Average exchange rate in 2011: Tenge146.6:US$1
Fiscal year
Calendar year
Time
Six hours ahead of GMT; five hours ahead of GMT in western Kazakhstan
Public holidays
January 1st-2nd (New Year); March 8th (Women's Day); March 20th (Novruz); May 1st (Unification holiday); May 9th (Victory Day); August 30th (Constitution Day); October 25th (Republic Day), October 26th (Eid al-Adha), December 16th (Independence Day)
March 06, 2012