Kazakhstan's economic freedom is declining, according to the latest ranking.
In 2024, Kazakhstan continued to lose ground in the international economic freedom ranking. This is indicated by the results of the latest economic freedom ranking from the Fraser Institute, as reported by inbusiness.kz. A comparison with the previous year shows that the country has dropped from 81st to 86th place. This decline is linked to a number of structural issues that complicate business operations and negatively affect the investment climate.
Reasons for the Ranking Decline
One of the key factors contributing to the decline in freedom is the risks associated with the legal system. Issues such as transparency, corruption, and inefficiencies within the judiciary are significant factors limiting economic freedom in the country. Insufficient protection of property rights and difficulties in law enforcement lead to a decrease in trust from foreign investors, impacting capital inflow and reducing entrepreneurial activity.
Another source of negativity is the practice of state regulation. The introduction of additional administrative barriers and increased control from government structures create obstacles for businesses. Despite declared reforms, Kazakhstan has yet to effectively liberalize its economy and create favorable conditions for competition.
Among the pressing issues on the agenda are questions regarding the financial instability of state finances. Financial instability raises risks for businesses and decreases the predictability of the economic environment, which is particularly critical for foreign investors. The devaluation of the Kazakh national currency and high inflation rates also play a significant role in the decline of economic freedom.
The socio-political aspect is also important. Social protests and political instability exert pressure on the economic system. The introduction of restrictive measures, tightening of control, and government intervention in the economy diminish trust from both businesses and the population.
Kyrgyzstan and Uzbekistan Surpass Astana
Compared to other Central Asian countries, Kazakhstan holds a relatively stable position but demonstrates negative dynamics. Kyrgyzstan has surpassed Astana in the ranking, securing 78th place as a result of reforms aimed at reducing state regulation and developing the private sector. The country is implementing measures to support small and medium-sized enterprises, allowing it to improve its ranking.
Uzbekistan has also overtaken Kazakhstan, rising to 84th place thanks to reforms focused on liberalizing the economy, privatization, and improving the investment climate. Despite a slowdown in the pace of reforms, the country shows steady improvement in its indicators.
Against this backdrop, Russia has lost positions, dropping to 100th place. Increased state control over the economy and sanctions continue to impact the country's ranking, where entrepreneurial activity is suppressed by heightened bureaucratic barriers and restrictions from the authorities.
Leaders and Laggards
The leaders in the freedom ranking for 2024 are Hong Kong and Singapore. Hong Kong once again confirms its position. Its strong legal system, protection of property rights, minimal government restrictions, and high degree of entrepreneurial freedom continue to keep the country at the top of the ranking despite political challenges.
Singapore, in second place, maintains its position due to highly efficient governance, low levels of corruption, and minimal barriers to doing business. The government actively supports entrepreneurial initiatives, attracting foreign investors and fostering innovation. Both countries exemplify how institutional resilience and a focus on free markets can promote growth and prosperity even amid global economic challenges.
The laggards in the realm of economic freedom are Venezuela and North Korea. Caracas continues to occupy the lowest positions in the ranking, exhibiting one of the poorest levels of economic freedom in the world. Hyperinflation, extensive state intervention in the economy, corruption, and a crisis in state institutions are leading to the collapse of the country's economic infrastructure. The national economy is in a state of complete decline, resulting in mass emigration and catastrophic conditions for business.
North Korea, as in previous years, ranks among the lowest, occupying one of the most unfavorable positions. Complete state control over the economy, the absence of private entrepreneurship, and a harsh dictatorship render any form of economic freedom impossible.
Trends and Forecasts for Kazakhstan
Kazakhstan faces numerous challenges to restore its position in the economic freedom ranking. The country requires deep reforms aimed at improving the legal system, reducing state regulation, and stabilizing the macroeconomic situation. Without systemic changes in economic governance and strengthening institutions for the protection of property rights, it will be difficult for the country to regain lost ground.
However, despite current problems, Kazakhstan still possesses growth potential. The country remains attractive to foreign investors due to its natural resources and strategic location. Successful implementation of reforms could not only stabilize the economy but also return Kazakhstan to a path of growth and development. To achieve this, it is essential to strengthen property rights protections, address excessive state regulation, improve the business climate, and implement a comprehensive set of measures to stabilize state finances.