Kazakhstan is generally benefiting from Russia’s geopolitical tensions through an inflow of high-skilled labour and businesses and opportunities for increased trade with the EU.
That said, high dependence on the Russian pipeline infrastructure and the need to balance its relationship with the EU are the risk factors.
In 2023, growth momentum may strengthen, but domestic constraints include a deteriorating inflationary outlook and high dependency on the oil sector, prone to sudden maintenance issues.
Financially, Kazakhstan’s fiscal and external balances remain comfortable.
Nevertheless, the scope for further strengthening of the Kazakhstani Tenge (KZT) appears limited given the expected return of the current account to deficit and likely normalisation of net private capital inflows in the face of risks of secondary sanctions related to ties with Russia.
