Recent assessments by the International Monetary Fund pointing to a possible “overheating” of Kazakhstan’s economy have sparked debate. However, a closer look at the country’s key macroeconomic indicators shows a very different picture. What Kazakhstan is experiencing today is not excessive expansion, but a healthy structural transformation, DKNews.kz reports.
In economic terms, “overheating” usually means growth that exceeds an economy’s real capacity, leading to labor shortages, rapidly rising wages and strong inflationary pressure. At present, these classic symptoms are largely absent in Kazakhstan.
Labor market remains balanced
One of the clearest indicators is unemployment. Since 2023, the unemployment rate has remained stable at 4.6–4.7%, suggesting no acute labor shortages. At the same time, wage growth continues to lag behind GDP growth, which is atypical for an overheated economy. In overheated conditions, wages usually rise faster than productivity, fueling inflation. That is not the case here.
Real sector growth outpaces services
Another important signal lies in the structure of economic growth. In 2025, real sector output grew by 8.7%, while the services sector expanded by 5.3%. During periods of overheating, the opposite is usually observed, with services and non-tradable sectors growing faster than production.
Kazakhstan’s current trajectory points to growth driven by manufacturing and production, not consumption bubbles.
Growth is backed by investment, not short-term demand
GDP growth reached 6.5% last year, and growth of at least 5% is expected in 2026. This momentum is supported by tangible increases in productive capacity and the implementation of industrial and infrastructure projects.
In other words, the economy is growing on a real foundation, not through temporary stimulus or excessive borrowing.
Non-oil sectors drive the economy
In 2025 and 2026, the main engines of growth remain non-oil sectors, including manufacturing, agriculture, construction, logistics and domestic trade.
Manufacturing alone grew by 6.4% in 2025, driven by strong performance in:
- mechanical engineering (+12.9%),
- automotive production (+17.5%),
- metal products (+13.6%),
- food production (+8.1%),
- chemical industry (+9.8%),
- beverages (+9.7%),
- rubber and plastic products (+7.6%).
These are not one-off gains, but the result of sustained investment and industrial expansion.
Reduced dependence on raw materials
Mining, including the oil and gas sector, is no longer viewed as the main source of economic growth. In the medium term, manufacturing growth is expected to significantly outpace mining.
According to forecasts, manufacturing growth will accelerate from 6.2% in 2026 to 6.6% by 2028, supported by new investment projects and the launch of additional production facilities. This reflects a strategic shift toward tradable and value-added sectors.
Investment makes the economy more resilient
Ongoing diversification is accompanied by a reallocation of investment toward manufacturing and transport-logistics infrastructure. This strengthens the economy’s resilience to external shocks and fluctuations in global energy prices.
Inflation has passed its peak
Inflation dynamics also support the argument against overheating. After peaking at 12.9% in September 2025, inflation began to slow from October, reaching 12.3% by December.
Government measures to adjust tariff policies and contain price growth for socially important goods played a role. Inflation is expected to continue declining this year and settle within the target range of 9–11% by year-end.
Fiscal discipline remains intact
A key disinflationary factor in 2026 is fiscal policy. The state budget is built on strict adherence to fiscal rules:
- no targeted transfers from the National Fund,
- guaranteed transfers capped at 2.77 trillion tenge,
- non-oil deficit reduced from 7.3% of GDP in 2025 to 4.9%.
These parameters help prevent overheating and support macroeconomic stability.
The bottom line
Kazakhstan’s economy today represents a pragmatic balance between growth and stability. Current trends point not to overheating, but to a deliberate structural transformation.
The country is not simply consuming more, but investing in production, infrastructure and diversification, while maintaining control over inflation, fiscal discipline and key financial indicators. This is precisely the type of growth that supports long-term economic sustainability.
