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

  • Kazakhstan will not face the Russian annexation of regions heavily populated by ethnic Russians as occurred in the Ukrainian region of Crimea in early 2014. While northern Kazakhstan does have a high proportion of ethnic Russians, any aggressive action by Russia would spark backlash from rising regional power China, and put on hold any expansion of the Eurasian Economic Union.

  • Kyrgyzstan's reliance on gold exports and workers' remittances from Russia will mean the economy remains vulnerable to external shocks in the years ahead. In 2014 and 2015 the drought in northern Kyrgyzstan combined with increased demand from Russia for Kyrgyz agricultural imports will see food price inflation rise, subduing private consumption growth.

  • Despite an increase in violence along Turkmenistan's Afghan border, and more...

To read the full article Register for Free or Login

Kazakhstan Operational Risk Coverage (10)

Kazakhstan Operational Risk

BMI View:

The key risks for businesses considering investing in Kazakhstan stem mainly around the threat of terrorism and criminal activity, corruption throughout the judiciary and at high levels of government and the ineffectiveness of law enforcement, which all serve to undermine the operating environment. At the same time, limitations in the logistics networks, particularly the astronomic costs to import and export goods substantially raise business costs. It is not all negative, however, with high levels of foreign direct investment, ambitious government expansion plans and a well-educated labour force enticing potential investors.

Due to the range of risks facing incoming businesses, we have awarded Kazakhstan an overall score of 50.6 out of 100 in our Operational Risk Index. This places it in 18 th position out of 30 countries in Emerging Europe and 75 th out of 170 countries globally.

Kazakhstan's...

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: The 2014/15 wheat harvest is expected to be a good one, although the low prices we expect farmers will receive for their crops provides further justification for the government's policy drive towards diversification of the grains segment. Corn and barley will have increasing importance as earners of foreign exchange and suppliers of feed to the burgeoning livestock industry. Our view for poultry to be the standout performer has been bolstered by further investment , with the country's largest farm yet due to open in 2015. We would be surprised if more major projects were not in the pipeline. Beef and pork will also receive support from the government and private sector , as we see the beef herd growing substantially. Dairy will also receive investment, but growth will be...

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. Border disputes, criminality, domestic infighting and domestic and transnational terrorism are just a few of those challenges.

BMI expects Kazakhstan's defence spending to have reached USD2.8bn by the end of 2014 and...

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 in which BMI believes saw increasing volumes across all freight modes with some of them recovering to pre-downturn levels, 2014 will signal further growth for Kazakhstan's freight transport.

Total trade is projected to pick up with our Country Risk desk forecasting a year-on-year (y-o-y) increase of 7.15% in 2014 following an estimated growth of 8.69% in 2013.

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...

To read the full article Register for Free or Login

Infrastructure

Kazakhstan Infrastructure

BMI View:

BMI View: The sluggish performance of Kazakhstan 's economy supports our move last quarter to drop our 2014 full year real growth forecast for the construction industry from7.3% to 3. 3 % . In the run up to the 2016 World Expo we expect the construction industry to perform better - although we note that following a major devaluation in the tenge the residential and non-residential sector will struggle to take off.

Key Trends And Developments

  • We are mainly highlighting the downside to our construction industry forecasts from the February 2014 currency...

To read the full article Register for Free or Login

Insurance

Kazakhstan Insurance

BMI View:

BMI View : As of late 2014, we look for single - digit growth in total premiums in US dollar terms through the forecast period. We recognise that we may have to revise our projections downwards once it become clearer how the sector developed through H2 20 14. Kazakhstan ' s insurance sector is one in which the weaknesses and threats are much more obvious than the strengths and opportunities.

Overall, it is it the weaknesses and threats that stand out in our assessment of Kazakhstan's insurance sector. Perhaps due to downwards pressure in rates on corporate lines, premiums in the non-life segment have been weak through H1 2014. For now, we look for moderate growth (in USD terms) in non-life premiums through the...

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 ann um and reaching a value of USD37.6 bn. 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)
  2012e 2013e 2014f 2015f 2016f

To read the full article Register for Free or Login

Petrochemicals

Kazakhstan Petrochemicals

BMI View:

BMI View: Central Asia is a rapidly evolving and growing market for petrochemicals that has been heavily import dependent in recent years. Over the medium term, the two most industrialised countries, Kazakhstan and Uzbekistan, are set to become net exporters with the construction of world-scale complexes likely to stimulate downstream investment in plastic and rubber conversion industries .

In the Central Asia region, only two states are active participants in the petrochemicals sector - Kazakhstan and Uzbekistan. Neither has significant existing ethylene capacity. In fact, their combined cracking capacity of 240,000 tonnes per annum (tpa) is less than that of Nigeria or Egypt. Uzbekistan is landlocked, and hence is faced with considerable transportation costs for its energy exports. Overall demand for chemicals has been on...

To read the full article Register for Free or Login

Pharmaceuticals & Healthcare

Kazakhstan Pharmaceuticals & Healthcare

BMI View:

BMI View: Kazakhstan ' s healthcare sector suffers from a lack of trained medical professionals and the inher en t difficulties of providing infrastructure and access to healthcare in such a large country. However, the government continues to show its commitment to improving healthcare as it allocates more funds to constructing   new health clinics across the country. Although Kazakhstan ' s growing pharmaceutical industry will be driven by demand for   generic medicines over the medium term, we believe that there are also significant opportunities for patented drug manufacturers as incomes rise and...

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 plan s 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 infrastructure will narrow the supply/demand gap...

To read the full article Register for Free or Login

Telecommunications

Kazakhstan Telecommunications

BMI View:

BMI View: Uzbekistan became the fifth and final Central Asian market to receive 4G LTE this quarter, as Beeline ( VimpelCom ) commercially launched the service in September 2014 . While it represents an important development for the region, we are largely bearish on the technology's short-term future , as the prohibitive cost will keep it out of reach of most subscribers, while 3G remains underdeveloped. Internet costs are some of the highest in the world, due to the landlocked nature of the region and government motivations to censor content. While t here is strong potential in the Central Asia telecoms industry, 4G will not see a significant uptake over our five...

To read the full article Register for Free or Login

Water

Kazakhstan Water

BMI View:

BMI View: Kazakhstan's water sector is facing an uphill struggle; ageing infrastructure, corruption and a reliance on neighbours for resources lends little credibility to the country. However, significant investment is being...

To read the full article Register for Free or Login