Kazakhstan, the largest economy in Central Asia, plays an important role in facilitating trade and cooperation between Asia and Europe. Its geographical position, bridging these two regions, grants it strategic importance in global trade, energy, and connectivity. What happens in Kazakhstan’s economy has ripple effects beyond its borders, influencing the economic landscape of Europe and Asia.
The expanded government meeting on January 28, chaired by the country’s President Kassym-Jomart Tokayev, offers a glimpse into Kazakhstan’s economic agenda, which seeks to adapt to global challenges and strengthen its role as a middle power.
Energy Transition
President Tokayev acknowledged the challenging global economic realities, including tariff conflicts, sanctions, and shifts in climate policies. These issues resonate globally, particularly among economies reliant on resource exports. For this reason, Kazakhstan needs to have a strategic vision for how to adapt to these realities. For instance, the shift in the global climate agenda, while creating instability in oil, gas, and coal prices, can also present opportunities for Kazakhstan to diversify its energy mix. By focusing on its green energy transition, Kazakhstan can remain relevant in the global conversation on cleaner energy sources, a move that could also attract green investments from Europe and Asia.
Of particular important here is Kazakhstan’s decision to move forward with its first nuclear power plant and plans for additional facilities. Last year, the country held a successful referendum on building a first nuclear power plant. At the expanded government meeting, Kazakh Prime Minister Olzhas Bektenov announced that Kazakhstan is concluding agreements for its first nuclear power plant in the Almaty Region and conducting location analysis for a second plant, with plans for a third. He emphasized that the government aims to become a leader in nuclear energy by integrating artificial intelligence and comprehensive digitalisation.
As a nation with the world’s largest uranium reserves, Kazakhstan can become a leader in nuclear energy. The implications of this initiative extend beyond Kazakhstan. Nuclear energy could position the country as a reliable energy exporter to neighbouring regions, including Europe, while supporting global efforts to reduce carbon emissions. Additionally, Kazakhstan’s nuclear expertise could foster cooperation with international partners, where nuclear energy is globally gaining renewed attention as part of the green transition. Earlier this month it was reported that a shortlist of four prominent companies has been selected for consideration to build the country’s future nuclear power plant: China National Nuclear Corporation (CNNC), Korea Hydro and Nuclear Power Co. (ICHNP), Russia’s Rosatom, and Électricité de France (EDF).
Beyond nuclear, Prime Minister Bektenov announced that Kazakhstan plans to add 450 megawatts of renewable energy capacity and build a wind power component manufacturing plant. As the global energy landscape evolves, Kazakhstan’s ability to achieve success in this transition will be closely watched, particularly by European and Asian partners seeking to invest in sustainable energy projects.
Reducing Reliance on Oil and Gas
Kazakhstan’s long-term economic transformation hinges on diversification. According to President Tokayev, in 2024 the country implemented 180 investment projects worth over $2.4 billion in the manufacturing industry, resulting in nearly 6% growth—the highest in a decade. Diversifying into sectors like manufacturing, renewable energy, mining, and infrastructure can make Kazakhstan’s economy more resilient and less dependent on the volatility of oil and gas markets.
It is notable that a large rare earth metals deposit has been discovered in the Karagandy Region of the country, containing 17 types of rare earth elements. Kazakhstan already plays an important role in the supply of critical rare earth metals, with established cooperation agreements with the European Union to support sustainable and secure supply chains. This discovery has implications for the global supply chain of critical materials needed for renewable energy technologies, electric vehicles, and electronics. With strategic partnerships, particularly with Europe and the United States, Kazakhstan could play a key role in reducing global reliance on rare earth imports from other regions.
Bridging Asia and Europe
Kazakhstan has a vision of becoming a transit hub. In this regard, the country’s infrastructure projects will be central to this objective. At the government meeting, President Tokayev highlighted the need to accelerate the development of the Trans-Kazakhstan railway corridor, which will become a key link in the Middle Corridor, which passes from Asia to Europe through Kazakhstan. If successful, this project can enhance connectivity between China, Central Asia, and Europe. Furthermore, investments in railways, airports, and fibre-optic communication under the Caspian Sea, as announced by Prime Minister Bektenov, will further facilitate trade and strengthen Kazakhstan’s role in global supply chains.
For Europe, these developments are particularly significant. As geopolitical tensions and supply chain disruptions prompt a search for alternative trade routes, Kazakhstan’s infrastructure projects could provide a reliable corridor linking European and Asian markets. Similarly, for China, these corridors offer an extension of the Belt and Road Initiative.
To achieve success in these initiatives, Kazakhstan will need to attract significant foreign investment. The country remains the main investment destination in Central Asia, yet the country will need to remain committed to economic liberalisation and streamlined bureaucracy if it to remain at the top.
Foreign direct investment fell by 36% in the first nine months of 2024 compared to the previous year, totalling $12.7 billion. To address this and attract substantial investment, Bektenov mentioned at the expanded meeting that 97 legislative amendments are in preparation to improve the business climate. These reforms are designed to appeal to both domestic and international investors, with the objective to ensure that Kazakhstan remains a hub for investment in Central Asia.
Ultimately, by diversifying its economy, investing in green energy, developing infrastructure, and embracing technological innovation, Kazakhstan can achieve sustainable development and growth. Its initiatives have the potential to enhance cooperation with Europe, Asia, and beyond, making Kazakhstan a key player in the global economic agenda.
The priority is to ensure that the initiatives outlined at the expanded meeting are successfully implemented. This will determine not only its economic trajectory but also its role as a key conduit of economic cooperation between Asia and Europe. As a result, Kazakhstan’s economic partners, including China and the European Union, will be closely watching the country’s economic transformation and its pursuit of sustainable growth.