WOOD Flash – Kazakhstan macro: untangling oil and policy tightening risks

After the preliminary growth estimate of 6.5% in 2025E, Kazakhstan is set to transition in 2026E towards a slower pace of growth, more consistent with the macroeconomic fundamentals. At its latest meeting, the NBK explicitly signalled little appetite to cut the policy rate until at least end-1H26E, citing the elevated uncertainty around the resumption of the regulated tariff increases in the spring, the inflationary impact of the tax reforms (including the VAT hike, effective from January), and the scale and composition of the planned quasi-fiscal stimulus through Baiterek Holding, countering the planned budget tightening. As we have argued previously, a growth deceleration towards the potential is more of a recalibration for Kazakhstan, which has been running a positive output gap for several years. It would allow for the enhancing of the current macro buffers and help to mitigate the downside risks from not only the lower oil prices currently (which seem poised to stay for the coming years), but also potential disruptions in the oil export infrastructure. Lastly, it would reinforce the NBK’s efforts to anchor inflation expectations. In this flash note, we outline the evolving oil-related risk profile for Kazakhstan – spanning export logistics, price assumptions, and balance-of-payments sensitivity – and assess the latest news on the ongoing rebalancing of the macroeconomic stance towards a more balanced, albeit still pro-growth, stance. Overall, the renewed focus on stimulus by the government (about KZT 8trn, or USD 17bn) is likely to be pro-inflationary, in our view, while putting upside risk on our GDP forecast of 4.5% for 2026E, via credit-driven and State-led investment channels.