The geographical concentration of Kazakhstan's foreign trade continues to strengthen, which may pose risks to its economy: imported inflation, devaluation shocks, and weakened food security. This is the view of the Analytical Credit Rating Agency (ACRA), as reported by the correspondent of the business information center Kapital.kz, citing the agency's data.
Experts note that historically, Kazakhstan's main foreign trade partners have been macroeconomic centers such as the European Union, China, and Russia.
Before the pandemic, the European Union accounted for at least half of the country's export volume (50% in 2014, 51% in 2018), while from 2020 to 2024 (from January to September), the EU's share averaged 41%. Traditionally, Russia accounted for no more than 10% of Kazakhstan's goods exports, and since 2020, it has ranged from 10 to 13%. As of the end of nine months in 2024, Russia's share was 11%, significantly lower than that of the EU and China, the latter having increased its share in exports to 18-19% in 2023 and 2024.
The majority of exports to the EU and China consist of fuel and energy products, while agricultural products are also supplied to China. In the structure of exports to Russia, chemical industry products and related sectors, machinery and equipment, metals, and metal products prevail.
In terms of imports, the EU holds a relatively stable position: annually, the EU imports about 17% of the total import volume into Kazakhstan (18.1% from January to September 2024). Before the pandemic, China's share in the country's imports was up to 20%, but since 2021, it has exceeded this level and reached 25% by the end of the last three quarters. Russia is also a key trading partner for Kazakhstan, with its share in imports being around 30%.
The EU and China import various types of finished goods into Kazakhstan, while Russia supplies metals and metal products, food, machinery and equipment, and products from the chemical and related industries.
In terms of total trade turnover, the EU remains Kazakhstan's primary trading partner (Italy plays a major role here, importing oil and gas raw materials). Until 2023, Russia ranked second in trade turnover with Kazakhstan, but in 2023 and 2024, it ceded this position to China, dropping to third place.
From 2014 to 2020, the EU, Russia, and China together accounted for about two-thirds of Kazakhstan's foreign trade turnover, while from 2021 to September 2024, this figure increased to 71-72%. In terms of both exports and imports, these macroeconomic centers continue to play a key role for Kazakhstan, accounting for 76% and 73% respectively by the end of the three quarters of 2024.
Trade with neighboring economies: what is happening?
Despite the dominant position of the EU, Russia, and China in Kazakhstan's foreign trade and the continued focus on these three markets, certain trade directions with medium-sized economies remain promising. For a number of them, Kazakhstan is an important trading partner (ranking among the top ten) in terms of mutual foreign trade volumes—these include Uzbekistan and Kyrgyzstan. Although trade with Turkey, South Korea, the USA, and Switzerland accounts for comparable volumes to those of Uzbekistan and Kyrgyzstan, Kazakhstan is not a major or priority trading partner for these countries.
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Kazakhstan can reasonably reduce its geographical dependence in foreign trade, enhance the diversification of trade routes, and increase trade volumes with countries that share common borders and have resolved issues related to simplified transport corridors and border control, where products from Kazakhstan might be more recognizable and in demand.
“The economies of Uzbekistan and Kyrgyzstan are considered medium-sized in terms of trade and market size, and while Kazakhstan's trade relations with them are expanding, they remain moderate overall. The potential for growth in trade volumes is evident, given the active development of these economies and their focus on investment and consumer imports,” ACRA notes.
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What are the dynamics and prospects of trade with Uzbekistan and Kyrgyzstan?
Uzbekistan
Recently, trade between Kazakhstan and its neighboring economies has been steadily developing. This is especially true for Uzbekistan, with trade turnover in nominal dollar terms increasing 2.1 times over the decade from 2014 to 2023. Kazakhstan's exports dominate the trade between the two countries—during this period, net exports grew from $66 million to $1.8 billion.
Kazakhstan exports agricultural and chemical products, as well as metal products to Uzbekistan, while mainly importing textiles, flat iron products, and motor vehicles.
The development of trade is largely linked to active economic transformations occurring in Uzbekistan. Since 2017, the country's economy has shown steady growth—averaging 5.2% per year—and is one of the few globally that maintained positive dynamics even during the pandemic. The structure of the economy is gradually changing: the share of industry is increasing*, while that of agriculture is decreasing**, indicating a need for increased investments*** and highlighting the demand for investment goods, including investment imports. This provides Kazakhstan with the opportunity to increase trade turnover.
*From 17.8% of GDP in 2016 to 23.5% in 2023.
**From 29% of GDP to 23% from 2016 to 2023.
***In 2023, the volume of investments in fixed capital amounted to 34.8% of GDP (averaging 28% from 2014 to 2023).
An important feature of Uzbekistan's economy is characterized by a double deficit—of the budget and the current account. This deficit is typically covered by the external debt of private companies and foreign direct investments. Consequently, economic activity in the country will be stimulated by the strengthening of domestic demand, supported through fiscal expansion and total imports, including investment imports and the import of consumer goods and services.
“An additional factor in the growth of the diversification of mutual trade turnover should be Uzbekistan's planned economic strengthening: by 2030, its volume is expected to reach $160 billion, with GDP per capita reaching $4,000. This indicates significant potential for this market and its attractiveness,” experts note.
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Kyrgyzstan
In trade with Kyrgyzstan, Kazakhstan's positive trade balance is also quite stable, with trade turnover in nominal dollar terms increasing by 60% from 2014 to 2023. Kyrgyzstan imports mineral products and chemical industry products, while the main exports from Kazakhstan include machinery and equipment, agricultural and processed food products, as well as mineral products.
Kyrgyzstan is characterized by a relatively low level of population wealth—the per capita GDP in current prices is about $2,000. However, the country's economy is quite open and has a high dependence on other economies in terms of foreign trade, particularly regarding commodity imports. In 2022-2023, Kyrgyzstan's commodity imports showed a sharp increase due to a rise in external trade with China*.
The country is experiencing active but volatile economic growth. Over the past decade—from 2014 to 2023—the average annual real economic growth was 3.7%, with 2022 witnessing the highest growth rate of 9%, while 2020 recorded a decline of 8.6%.
*In 2023, Kyrgyzstan imported goods worth $11.5 billion, or 82% of GDP; from the third quarter of 2023 to the second quarter of 2024, this figure is projected to reach $12.34 billion, or 82.2% of the GDP forecasted by ACRA for 2024.
Kyrgyzstan is rapidly increasing its transit potential, and the expected commissioning of the “North-South” transport corridor is particularly important for boosting trade volumes, as it will provide an alternative route connecting the northern and southwestern regions of the country. Construction has also begun on a railway line from Kashgar (China) towards Andijan (Uzbekistan) through Kyrgyzstan as part of the global transport project “One Belt, One Road.” Additionally, the opportunities for export growth are enhanced by the joint integration processes involving Kazakhstan and Kyrgyzstan—namely, the EAEU and CIS platforms.
Although the Kyrgyz market is smaller compared to other trade directions for Kazakhstan, it holds growth potential, considering the openness of the Kyrgyz economy and the improvement of trade and transport infrastructure.
“In conclusion, it is worth noting that Kazakhstan's intensified focus on foreign trade interaction with its three main partners—traditionally the European Union, Russia, and China—increases the risks associated with the external sector for the country's economy. Given this, the potential for cooperation with neighboring countries such as Uzbekistan and Kyrgyzstan becomes particularly significant, considering the active development of these economies and the existing trade volumes