Republic of Kazakhstan obtained independence in 1991, it is only second to Russia for economic size amongst the former Soviet Republics. Kazakhstan is a Central Asian country aligned to both Europe and Asia due to its strategic location. Today, 15.12 million people call Kazakhstan home. The nation is home to a diversified economy from agriculture to mining/energy to manufacturing. The North Caspian Sea holds vast large oil reserves for Kazakhstan and much of the country’s future wealth. Great economic growth over the last few years (year 2002-05 at a stunning 9 percent annual growth) particularly with high oil prices which resulted in currency appreciation for the tenge. As an oil exporter, the country has recently been upgraded to investment grade status recording both strong foreign direct investment levels and capital inflows.
Economic Statistics
Total GDP using purchasing power parity at $132.7 billion USD (2005) with corresponding GDP/Capita at $8,700 USD (2005). GDP as measured by market prices at $43.8 billion USD (2005). GDP growth for 2005 at 8.8 percent, 2006 is forecasted at 7.7 percent. Inflation quotes include year 2005 at 7.4 percent, 2006 at 7.1 percent, 1999 at 17 percent. The current account is in surplus at $3.3 billion USD (2005), large trade surplus component. Fiscal surplus for 2004 at a strong 2.7 percent of GDP. Unemployment came in at 7.6 percent (2005). Foreign exchange reserve assets stand at $11.1 billion USD (2005) equivalent. Interest rates were at 4 percent (2004).
Oil and Gas/Other Energy Statistics
Proven oil reserves at 26 billion barrels (2004). Oil production at 1.3 million bpd (2005), oil exports at 890,000 bpd (2003). Natural gas reserves are at 3 trillion cu m (2004). In terms of electricity production, Kazakhstan is a net exporter.
CURRENCY: ISO Symbol ‘KZT’, Kazakhstan tenge. At time of currency review on March 18, 2006, the tenge had an exchange valuation of 127.84 KZT to the US-dollar (USD). Floating exchange rate regime is currently in place. National Bank of Kazakhstan (Central Bank) targets inflation at 5 to 7 percent, currency and price stability currently prevails within Kazakhstan. Limited capital account controls.
CURRENCY HISTORY: the tenge came into circulation in November 1993, it replaced the Russian ruble at an exchange rate of 500 rubles to 1 tenge. Historical exchange quotes include: year 2005 at 133.4 KZT to the USD, 2004 at 136, 2003 at 149.5, 2002 at 153.2 January 2001 at 145.09 KZT, year 2000 at 142.13, 1999 at 119.52, 1998 at 78.3, 1997 at 75.4, 1996 at 67.3, 1995 at 60.95 and 1994 at 33.5. The Russian debt crisis in 1998 greatly impacted the tenge by knocking upwards of 40 percent off the value of the tenge currency in relation to the USD from 1998-99.
CURRENCY FORECAST: risk in medium term - diversify economy away from energy & minerals. Hydrocarbon economy will continue to propel growth, it is analyzed that within 10 years, national oil output will rise to 3.5 million bpd from the current 1 million bpd coupled with large production increases in natural gas output. By 2008, Kazakhstan will likely be a net creditor nation. The country will in turn use its new financial resources for investment into its infrastructure such as hospitals, roads, railways, etc. Immense energy and mineral resources - great global commodity boom bull market is well underway. Kazakhstan’s extensive mineral wealth include being the world’s largest producer of chromium, vanadium and bismuth. The country is also a major producer of other metals & minerals such as coal, gold, silver, etc.
Large capital inflows will continue to put appreciation pressure on the tenge. Short term risks include inflationary pressures as a result of the dramatic increase in the nation’s monetary base. The overall currency outlook for Kazakhstan is good. Improvements however are required in the country’s judiciary in order to maintain foreign investment credibility in developing the country’s rich natural resources. Other area’s of concern include environmental pollution and elements of religious extremism.
