The commodity extraction boom, which took place from 2004 to 2011, resulted in Kazakhstan’s industrial sector becoming highly concentrated on mining and related areas.
After the oil boom of 2004–2011 began in Kazakhstan, commodity extraction essentially became the core and trend-setting element in terms of development of the country’s industrial production. In 2005, the share of oil and gas production exceeded half of the total volume of industrial production, while in the peak year of 2011 it amounted to 54%. At the same time, the total output of all mining areas in the specified year reached a peak of 63%.
After Kazakhstan became independent, the share of the manufacturing industry exceeded the share of the mining industry by almost four times (according to 1992 data). This trend changed in the oil boom years — in 2002, extraction in monetary terms exceeded refining, while in 2011 it was two times larger than the latter.
From 2011 to 2020, extractive industries dominated the structure of industrial production, but this trend ended in 2020–2022. In 2020, amid the recession, manufacturing exceeded extraction in terms of volumes, while in 2021 these segments contributed almost equal shares: 46% and 48%, respectively. These changes to the structure of industrial production can be explained by three key differences in the structure and the development of the extractive and manufacturing sectors.
1. Manufacturing has demonstrated more stable growth. From 2012 to 2022 inclusive, average annual nominal growth in manufacturing was 1.5 times higher than in the extractive segment. In 2009, 2015 and 2020 there were periods of decline in nominal terms in the extractive sector, yet manufacturing declined less in 2009 and 2015 and demonstrated growth in 2020, despite the economy entering a recession. Therefore, growth rates in the manufacturing sector are rather stable, while in the extractive sector they are more volatile.
2. Oil and gas continue to be the core of the mining industry with a 70–80% share, which makes this segment practically homogenous. The structure of the manufacturing industry is more diverse — it includes several important and dynamically developing areas such as metallurgy, food production, and chemicals.
Figure 1. Dynamics in industry sectors, KZT bln
Source: Bureau of National Statistics of the Agency for Strategic Planning and Reforms of the Republic of Kazakhstan (BNS ASPR RK)
Figure 2. Kazakhstan’s leading industries by investments in fixed assets (in real terms) and growth index (circle size shows production volume in 2022, axis intersection shows industry level in general)
Source: BNS ASPR RK
3. Regarding the extractive industries, investments in fixed assets decreased in real terms in 2022 compared to 20101, and there was moderate growth in the manufacturing industries, which turned out to be more significant in some segments. The largest inflow of investments in real terms mainly impacted manufacturing industries, and the leaders were pharmaceuticals, production of coke, petroleum, rubber and plastic products, finished metal products, as well as furniture, chemical, and pulp and paper industries. The growth index for the period after the 2009 crisis (2009–2022) reflects this situation in the context of sectors.
1 Official statistic forms for investments in industry sectors have not been revised since 2010. This ensures more sustainable data and lesser risk of erroneous estimates.
Figure 3. Kazakhstan’s industries by investments in fixed assets (in real terms) and growth index2 (circle size shows production volume in 2022, axis intersection shows industry level in general)
2The figure does not show industries deviating from the common trend due to a very low base of investments in fixed assets: production of coke and petroleum products, other non-metal mineral production, rubber and plastic industry, and the pharmaceuticals industry.
Source: BNS ASPR RKIn general, the Agency notes that, against the background of stable output growth with more active investments in a number of manufacturing sectors, Kazakhstan’s industry is becoming more diversified and less concentrated on oil and gas production.
