Kazakhstan enters mid-2025 in a somewhat different position from previous years. The economy is showing signs of stable growth, with the World Bank projecting GDP expansion driven by non-oil sectors, and revived investor interest. Inflation has eased, and fiscal buffers have been replenished following earlier shocks from the pandemic and energy price volatility. While hydrocarbons remain central to state revenues, policy shifts indicate a gradual move toward diversification, particularly in logistics and mining.
Politically, President Tokayev’s government is managing a controlled reform process. It has introduced targeted changes in governance and public services, including digital upgrades outlined in the Data Reportal 2025 Kazakhstan report. But key structural problems like a non-transparent judiciary, poor contract enforcement and entrenched elite influence, still persist and remain a concern for Western investors.
Kazakhstan is shifting its strategy. It is no longer just a commodity supplier; it is positioning itself as a transit hub for trade between Europe and Asia. Investments in rail lines, dry ports and customs upgrades clearly demonstrate this. The government is also encouraging more private sector involvement in agri-processing and green energy, though slow-moving bureaucracy still holds things back.
The country is generally moving toward cautious modernisation. The government is trying to cut its reliance on oil and make better use of its location and geopolitical ties. The outlook is positive, but careful diligence and risk management are essential.
From resource dependency to diversification: Kazakhstan’s evolution
The economy in 2025 is showing steady adjustment. The World Bank expects real GDP to grow, backed by strong consumer spending and improved investor confidence. Inflation, which was historically high, has begun to ease. The government has also tightened fiscal policy, rebuilding financial reserves that were used during the pandemic and the 2022 unrest.
However, while it does still rely on hydrocarbons for revenue, it is working to cut that back. Government spending on infrastructure and digital connectivity is beginning to change the shape of the economy. The 2025 Data Reportal reports over 17 million internet users and a rising mobile first population, along with an opening up of opportunities in fintech and logistics.
President Tokayev is managing a delicate political balance. His government has rolled out reforms to modernise public services and attract foreign investment. But deeper problems do still remain. The judiciary lacks transparency, legal enforcement is uneven, and elite groups continue to control much of the commercial landscape.
That being said, the business environment is more stable than in the past. Tokayev is focused on attracting foreign investment, especially in renewables and agri-processing. But investors will need to be cautious. Bureaucracy and vague regulations coupled with snail pace legal reform continue to pose real risks to market entry and long-term returns.
Courting the West while facing East
Kazakhstan is maintaining a multi-aligned foreign policy, managing relations with both East and West. The European Union (EU) remains a key partner. Under the Global Gateway initiative, co-operation has expanded in critical raw materials and renewable hydrogen. The 2022 strategic Memorandum of Understanding (MoU) was reaffirmed in 2025, reflecting the EU’s ongoing interest in Central Asian trade links and clean energy.
The April 2025 EU–Central Asia Summit gave fresh weight to the relationship. Joint declarations focused on improving trade links and building transport connections, while also addressing supply chain vulnerabilities.
For Kazakhstan, EU engagement offers both political diversification and access to high-value industrial and energy markets. US–Kazakhstan relations, however, remain limited. Trade is present but American firms face high entry barriers. Unclear regulations and compliance are just a couple of the obstacles faced.
As noted in a recent QazInform interview, US companies still struggle with Kazakhstan’s legal system and institutional uncertainty. Kazakhstan does present clear commercial value, access to strategic raw materials and an expanding logistics corridor between Asia and Europe. But Western investors need to factor in the risks, including exposure to US-China tensions and weak contract enforcement. Success depends on a well-informed, risk-aware entry strategy.
The Eastern engine: Kazakhstan as a strategic node in China’s westward push
Nevertheless, Kazakhstan’s ties with China have become a key part of its economic and geopolitical strategy. In 2025, President Tokayev described the relationship as a “permanent comprehensive strategic partnership”. Trade between Kazakhstan and China is still growing. In 2024, China remained Kazakhstan’s top export market, with trade exceeding US$31 billion.
Chinese investment now goes beyond oil and gas, covering key infrastructure projects. Recent deals focus on grain and livestock logistics, aligning with China’s food security goals. At the same time, China is backing Kazakhstan’s nuclear energy plans, providing technology and financing that point to an even deeper partnership.
Cultural ties are also developing. Chinese tourism to Kazakhstan has increased ninefold, and a Kazakh cultural centre is set to open in Beijing in 2025, strengthening people to people networks and soft power bonds. Kazakhstan is a key logistics hub in the Belt and Road Initiative’s shift westward. Routes like the Khorgos Dry Port and Aktau seaport offer overland alternatives to maritime paths that face growing geopolitical risks.
However, deeper ties with China does carry risks. Heavy reliance on Chinese capital and strategic projects raises concerns over sovereignty and control. For foreign investors, Kazakhstan’s pivot East offers new access but also calls for careful political risk assessment.
Turkic brotherhood with a modern agenda
Kazakhstan’s relationship with Turkey grew stronger in 2025, driven by cultural ties and shared strategic goals. A new military co-operation plan signed in Ankara formalised joint defence planning and expanded security talks between the two countries. Further, Kazakhstan and Turkey have built closer parliamentary ties, showing stronger political co-ordination across various areas.
Trade is growing as well. Turkish imports of Kazakh goods are rising and Turkey is now one of Kazakhstan’s main export markets.
Their economic relationship is reinforced by shared cultural links through the Organization of Turkic States, which encourages co-ordination across public policy and education.
The Middle Corridor is central to Kazakhstan/Turkey logistics plans as well. This overland trade route connects China to Europe through Central Asia and the South Caucasus. Key infrastructure like the Baku-Tbilisi-Kars railway supports this vision, with both countries aiming to be core parts of a reworked Eurasian supply chain.
Strategically, the partnership gives Kazakhstan a counterbalance to China’s growing role. Turkey links it to Europe, while China anchors the eastern end, creating a two-way trade route. But managing both relationships isn’t simple. As China and Turkey compete for influence in Central Asia, Kazakhstan will need to navigate competing interests, while taking advantage of both.
The sanctions loophole effect: quiet gains amid geopolitical tensions
Kazakhstan’s location between Russia and China has made it a key trade route as global sanctions tighten. Since Western restrictions on Russia began, re-exports through Kazakhstan have increased. Items such as electronics, cars and industrial equipment are now more often shipped to Russia via Kazakh territory, backed by both subjective reports and customs data.
Western authorities are starting to examine these indirect trade flows more closely, but enforcement remains uneven. Kazakhstan denies helping Russia bypass sanctions and continues to state that it remains neutral and committed to international rules. But in reality, weak enforcement and limited legal oversight have allowed informal trade routes to continue, especially in goods prone to re-export. This situation has boosted demand for logistics and customs services, especially in cities like Almaty and Aktobe. Local firms are benefiting from short-term gains linked to grey-zone trade. But for foreign investors, it presents a more complex and riskier environment.
The main risk here is reputational. Doing business in Kazakhstan’s trade and logistics sectors now carries the chance of being linked – directly or indirectly – to sanctions evasion. Companies involved in supply chains or joint ventures need to carry out thorough checks on local partners and compliance processes. The opportunity is there, but it requires careful handling.
Investing in the transit economy
Foreign direct investment in Kazakhstan jumped in early 2025, driven by rising interest in its position as a key transit and energy partner in Eurasia.
According to assets, new capital is targeting areas that support the country’s shift toward industrial development and cleaner energy sources. Infrastructure investment is picking up across both public and private sectors. Key projects include upgrades to the national rail system, expansion of dry ports like Khorgos, and new digital freight tracking tools. Kazakhstan is also improving links to China and investing in Caspian Sea ports, all aimed at strengthening its role in East–West trade.
Kazakhstan is also focusing on energy diversification. A partnership with the EU is helping it develop green hydrogen and battery raw materials, supporting Europe’s push to cut emissions. At the same time, Kazakhstan is expanding its nuclear energy program with support from China and investing in renewables to cut its reliance on fossil fuels at home.
For investors, Kazakhstan’s role in transit trade is not just temporary, it marks a long-term shift. As Red Sea shipping routes face further disruption, the overland China–Europe corridor through Kazakhstan is becoming a reliable alternative. But making it work means committing to the long haul and staying alert to the political and operational risks that come with it.
From pivot to platform: Kazakhstan’s next moves
The country is trying to move beyond its role as a geopolitical pivot and become a fully integrated economic platform. The government is driving a digital overhaul aimed at improving connectivity and streamlining public services, with the goal being to modernise public services and make it easier for both business and citizens to operate.
Moreover, the country is under pressure to address youth engagement and fix gaps in education. A growing number of young people entering the workforce has pushed the government to update vocational training, improve digital skills and expand support for entrepreneurship. Efforts to diversify the economy are still underway and Tokayev is trying to encourage private sector growth, while making the business environment more transparent and predictable. But problems remain, bureaucracy is slow, elite groups still control major sectors, and institutions that deal with investors are often inconsistent and unclear.
Kazakhstan’s long-used multi-vector diplomacy is still central to its foreign policy. The government avoids choosing between East and West, keeping ties open with Beijing, Brussels, Ankara and Washington. But that balancing act is getting harder as global tensions rise.
The stakes are clear: If Tokayev follows through on reforms, continues to build on the country’s trade corridors and maintain the country’s diplomatic neutrality, Kazakhstan could become Eurasia’s key hub for logistics and resources. If he falls short, it risks becoming dependent on the powers it is trying to balance.
Conclusion
Kazakhstan is no longer just a steppingstone; it is actively shaping Eurasia’s future. With targeted investment and a balanced foreign policy, it is building key East–West trade routes that avoid maritime chokepoints and serve the major global players.
For investors, the appeal is simple. Land access between China and Europe, critical minerals, rising renewable energy capacity and a growing urban consumer market. There are risks, not the least of which being legal uncertainty and weak contract enforcement, but also the growing dependence on Chinese money that concerns many who want to know how it will affect long-term stability and autonomy.
Western governments and business now must decide. Without more active involvement – through trade deals, investment backing or joint infrastructure projects – China and Turkey will continue to expand their influence in Central Asia. In contrast, public–private co-ordination from the West could lower market barriers and keep Western firms competitive in a region increasingly being shaped by others. For Kazakhstan, following through on reform is critical. Investor confidence will depend on whether the legal system becomes more transparent and the broader business environment more accessible.
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