4.2% Growth Despite Decline in Oil Prices: Kazakhstan's Manufacturing Sector Drives the Economy
Central Asia Column “Steppe Ahead”
Kazakhstan’s economy grew by 4.2% in the first nine months of 2026. Oil production fell by 8.3% to 69.4 million metric tons during the same period. Deputy Prime Minister and Minister of Economy Serik Shumangarin cited both figures on October 13 during a government meeting in Astana. According to his report, the non-resource sector grew by 5.4%, thereby driving the economy of Central Asia’s largest economy. This makes it virtually impossible to reach the official annual target of 5.4%.
Oil Production Plummets, Industry Grows Strongly
The production figures illustrate the extent of the slump. From January through September, Tengiz produced 26.7 million metric tons, Kashagan 12.8 million metric tons, and Karachaganak 7.5 million metric tons. Deputy Energy Minister Yerlan Akbarov reported these figures at the same meeting. According to the financial news portal Investing.com, production fell particularly sharply in July. This was due to disruptions in exports via the Caspian Pipeline Consortium. The majority of Kazakhstan’s oil exports travel via this route to the Russian Black Sea port of Novorossiysk. Since August, production has returned to its previous level.
The rest of the economy offset the shortfall. According to the English-language newspaper Astana Times, construction, industry, transportation, and trade accounted for more than 75% of growth. The manufacturing sector grew by 8.6%. Within the industrial sector, light industry grew by 62.4%, the chemical industry by 23.4%, and mechanical engineering by 22.8%. Schumangarin also pointed out the sectoral breakdown of GDP: By the end of 2025, the oil sector still accounted for 7.8%, manufacturing for 14.1%, and mining for 12.4%. According to the Astana Times, Deputy Minister of Industry Kuandyk Kashkenov added that the country is now producing goods that it had never previously manufactured domestically.
Private investment rises by 18.2%
Investment is the second driver of growth. Capital expenditures reached 16.1 trillion tenge from January through September, equivalent to 35.7 billion U.S. dollars. That is 7% more than in the same period last year. “What’s remarkable is that private investment, which rose by 18.2%, is the main driver of investment growth,” Shumangarin said, according to the Astana Times. Foreign direct investment totaled $9.4 billion in the first half of the year.
The largest inflows of capital went to the industrial sector (up 40.1%), the construction sector (up 32%), and the information technology sector (up 29.2%). Since the beginning of the year, 106 industrial projects have been launched, creating approximately 8,000 permanent jobs. By the end of the year, the government aims to complete 200 additional projects worth 1.7 trillion tenge, equivalent to $3.77 billion. According to the Astana Times, exports of goods and services rose by 25.4% to $55.3 billion in the first half of the year.
Logistics also supports this positive picture. Freight transit through Kazakhstan increased by 13.1% in the first nine months. Railways transported 241.7 million metric tons of freight, an increase of 3%. Road freight traffic grew by 5.6% to 270.4 million metric tons. The country thus continues to benefit from the expansion of the Middle Corridor between China and Europe. In the electricity sector, power plants generated 91.7 billion kilowatt-hours. Renewable energy plants supplied 7.8 billion kilowatt-hours of that total; the annual target is 8.8 billion
Government target of 5.4% is out of reach
The 4.2% growth is solid, but less than planned. In 2025, Kazakhstan’s economy still grew by 6.5%. According to the Kazakh economic portal Kapital.kz, the government had projected a 5.4% increase for 2026. As early as May, Shumangarin calculated the cost of the oil shortfall: “We would already be above 6%,” he said at the time when asked what the growth rate would be at full production.
The domestic economy is also cooling off. According to the state news agency Qazinform, growth in consumer loans fell from 26.4% to 10.4% within a year. The strong tenge is weighing on exporters’ revenues and the national budget. Inflation fell to 9.3% in September from 9.8% in August. It thus remains well above the National Bank’s target of 5%. At least business sentiment is improving: The National Bank’s business activity index rose to 50.4 points in September. In December 2025, it had stood at 49, which is below the growth threshold. Reserves serve as a buffer: At the end of September, the National Bank reported $66.2 billion in gold and foreign exchange reserves, while the National Fund held $66.7 billion.
For the region, this interim assessment sends a clear signal: For the first time, Kazakhstan has been growing for months without its most important commodity as a driver. Whether this trend will hold depends on two questions. Will private investment maintain its pace if loans remain expensive? And will the export route via Novorossiysk remain stable? July showed how quickly a pipeline disruption can impact GDP.
Source: Astana Times, Qazinform, Investing.com (EN), Kapital.kz (RU)