AGP Executive Report

Services PMI: Kazakhstan’s services sector kept expanding in May (Business Activity Index 52.7), driven by new orders and easing price pressure, but employment fell again for the fourth straight month. Urban Transport: Astana launched Central Asia’s first urban light rail, a 22.4 km driverless line with 18 elevated stations, cutting end-to-end travel time to about 28 minutes. Kazakhstan–Cyprus Deal-Making: Presidents Tokayev and Christodoulides exchanged multiple intergovernmental documents covering ICT, e-government, space, cybersecurity, culture, education, sports and business ties; Cyprus also opened its first embassy in Central Asia in Astana. Aviation & Tourism Links: Hong Kong plans to relaunch direct flights to Almaty in early 2027, while a Hong Kong–Uzbekistan direct route is expected this year—both aimed at boosting business travel and tourism. State Contract Watch: Integra Construction KZ and BI Group-linked Alem Qurylys AQ are bidding for a T84.3bn state contract for engineering networks and transport infrastructure in Atyrau SEZ. US Forced-Labour Tariffs: The US proposed Section 301 duties on 60 economies over forced-labour enforcement failures, with Kazakhstan among those listed—raising trade-cost risks for exporters. Hospitality Investment: Kazakhstan is in talks with Spain’s Barceló Hotel Group on hotel development in Astana and Almaty, seeking international operators and completed-property options. Logistics Record: Kazmortransflot set a May record on the Aktau–Alat TITR line, moving 7,451 TEUs.

GDP Outlook: The EBRD projects Kazakhstan’s real GDP growth at 4.7% for 2026, after a softer 3% pace in Q1 as oil-sector disruptions weighed; mining contracted 11.4% y/y with a recovery expected later in the year. Water Security: Kazakhstan’s Kazvodhoz is working with the US Bureau of Reclamation to cut agricultural water use, including digital metering/telemetry and reducing canal losses, with training for Kazakh water staff. Trade & Tariffs: The US USTR is proposing new Section 301 tariffs tied to forced-labor enforcement failures across 60 economies, with duties up to 12.5% (10% for those with stronger commitments). Aviation Costs: Jet fuel price volatility is rising again amid Middle East disruptions, threatening margins for Central Asian carriers including Kazakhstan’s airlines. Bilateral Business Push (Cyprus): Cyprus and Kazakhstan are deepening cooperation after a high-level visit, signing agreements on digital transformation, education, culture, sports and investment, while direct Air Astana links to Larnaca expand connectivity. Regional Finance: The EBRD warns Middle East-driven energy shocks could slow growth across its regions, including Central Asia, via higher energy costs and weaker manufacturing. Gold Reserves: Central banks kept buying gold in April after March sales, and gold has overtaken US Treasuries as the top reserve asset. Transport Corridor: Kazakhstan is inviting Cyprus to join efforts to develop the Middle Corridor (Trans-Caspian route), aiming to boost logistics, finance and trade links.

Alatau Push: President Tokayev told the government to accelerate Alatau’s development as a “city of the future,” backed by a new constitutional legal framework, tax preferences, and simplified rules for business. Cyprus-Kazakhstan Ties: Cyprus President Nikos Christodoulides begins an official visit to Kazakhstan, with talks focused on expanding trade, investment, and cultural links. Forced-Labor Trade Pressure: The US USTR advanced Section 301 actions tied to failures to ban forced-labor imports, proposing additional responsive measures for affected economies. China Financing Watch: Kazakhstan is stepping up borrowing from China, including a debut 3.4bn yuan panda bond sale, as debt to Beijing rises and new funding sources open. Labor Rights Update: Kazakhstan plans to submit a harassment law to parliament in autumn 2026, defining terms and setting employer responsibility. Aviation Connectivity: LOT launched Warsaw–Almaty direct flights, while Cathay Pacific plans direct Hong Kong–Almaty service from 2027. Capital Markets Link: Kazakhstan’s sovereign panda bonds started trading on the Astana International Exchange after a 1.9% yield issuance. Mining Modernization: Kazakhstan compiled a modernization list for 50 priority mining and metallurgical firms, with investments exceeding 530bn tenge. Business & Travel: Trip.com’s tourism awards included Kazakhstan’s Almaty Museum of Arts, highlighting growing demand for Central Asia travel. Energy/Industry Cooperation: Kazakhstan and Türkiye discussed expanding energy, petrochemicals, renewables, and the Trans-Caspian transport route.

EU Sanctions: The EU is preparing a 21st Russia sanctions package aimed at hitting oil revenues and sanctions-evasion networks, with the oil price cap and “shadow fleet” in focus. Tech Ecosystems: Kazakhstan has climbed into the global top 10 fastest-rising tech ecosystems, with Almaty and Astana Hub highlighted for scaling startups and attracting investment. China Finance: Kazakhstan launched its debut RMB “panda bond” sale, raising 3.4bn yuan at a record 1.9% yield via Bond Connect. Mining Modernization: Kazakhstan plans to modernize 50 priority mining and metallurgical enterprises, with total investments exceeding 530bn tenge. Kazakhstan–Hong Kong Business: Investment cooperation deepened as Hong Kong’s John Lee pushed ties with Kazakhstan; Cathay Pacific also announced direct Hong Kong–Almaty flights starting Q1 2027. Energy Transition: Kazakhstan targets 8.4 GW of new renewables by 2035 while continuing to position itself as an Eurasian energy transit hub. Markets & Finance: Freedom Holding Corp. reported record revenue and doubled net profit for fiscal 2026; the SEC issued a Wells Notice to its CEO. Trade & Agriculture: Agricultural exports to Iran nearly doubled in 2025, driven by grain shipments. Manufacturing Pulse: April PMI showed tentative stabilization in manufacturing, though conditions remain in contraction.

Kazakhstan–Turkey Energy Talks: Energy Minister Yerlan Akkenzhenov met Turkey’s Alparslan Bayraktar in Baku to discuss expanding cooperation across oil and gas, power, renewables, and petrochemicals, with focus on the Trans-Caspian transport route and joint projects. Manufacturing Pressure: Kazakhstan’s manufacturing stayed in contraction in May as the PMI slipped to 49.0, with weaker demand, financing constraints, and falling employment weighing on output. Kashagan Turnaround Delayed: Kazakhstan ordered the Kashagan operator to postpone the second-largest field’s planned 2026 turnaround to 2027, leaving contractors mobilized and affecting schedules for inspections and repairs. Freedom Holding Results: Freedom Holding Corp. more than doubled fiscal 2026 net income to $153.3m and set a record $2.19bn revenue, driven by growth in brokerage, banking, and insurance customer bases. Kazakhstan–Hong Kong Connectivity: Hong Kong will relaunch direct flights to Almaty in Q1 2027 and explore a double-tax deal to boost investment and business links. KazTransOil Dividends: KazTransOil will pay 2025 dividends of 45.386bn tenge (118 tenge per share). Armenia EAEU vs EU Noise: Armenia’s leaders rejected calls for an EU/EAEU referendum as “theoretical,” while Russia and allies urged a decision—keeping regional trade and policy uncertainty in the background.

Kazakhstan Finances: Republican budget revenues hit 100.9% of the planned target, with 7.41 trillion tenge collected (up 25.1% year-on-year), driven by VAT, corporate income tax, mineral extraction tax and oil export customs duties, while spending keeps a development focus on roads, utilities, transport corridors and digital/energy/water projects. Security Cooperation: Kazakhstan and China held security consultations in Astana, agreeing to intensify joint work against terrorism, extremism, separatism and cross-border crime through closer law-enforcement coordination across UN, SCO and other formats. EAEU Politics: After the Astana EAEU summit, Russia and allies pushed Armenia toward a nationwide referendum on EU vs EAEU membership, with Kremlin officials saying all “nuances” must be worked out before December. Trade & Logistics Tech: Kazakhstan and Russia launched a pilot for driverless freight transport, aiming to boost cross-border cargo flows and speed up digital logistics along North-South and East-West corridors. Business & Investment Links: Hong Kong Chief Executive John Lee met Kazakhstan’s leadership, urging firms to use Hong Kong’s financial and business services; talks also covered investment, finance and transport/logistics cooperation. Energy Partnerships: Kazakhstan and Japan reaffirmed nuclear cooperation, while Kazakhstan signaled plans to expand electricity trade with neighbors and deepen regional energy integration. Health Industry: Kazakhstan’s pharmaceutical and medical device investment reached $142.8m in 2025—more than triple 2023—supported by modernization and a labeling/traceability system. Culture & Heritage: Archaeologists unearthed artifacts at the medieval Zhankent settlement, including ceramics and animal remains, to shed light on local daily life and economy.

Banking Reform: Kazakhstan plans to change how non-residents open bank accounts, shifting to a risk-based monitoring approach to cut regulatory burden while boosting transparency. Agri-Exports: Agricultural exports to Iran jumped 97% year-on-year to $238.5m, with grain exports more than doubling to 1.1m tons; talks also focused on expanding beef and lamb meeting halal and veterinary standards. Nuclear Deal: Kazakhstan says it is ready to store Iranian enriched uranium under IAEA oversight if a US-Iran agreement is reached, with about 440kg of 60% enriched material discussed. Energy & Trade with Russia: President Tokayev expects Kazakhstan-Russia trade turnover to top $30bn soon, citing 177 joint projects worth about $53bn, while energy talks include a possible gas pipeline to China via Kazakhstan. Water Diplomacy: OSCE, UN University and CAREC wrapped a Dushanbe seminar on transboundary water cooperation, stressing data-sharing and women’s participation in water diplomacy. Regional Business Links: A Kazakhstan-Uzbekistan interregional forum in Tashkent pushed industrial cooperation and investment, with plans for joint projects and expanded business contacts.

AI and Jobs: Speaking at the Eurasian Economic Forum in Astana, Vladimir Putin warned that AI could replace workers at scale, calling the process “irreversible” and saying millions may lose jobs or be forced to change professions. Nuclear Cooperation: IAEA chief Rafael Grossi said Kazakhstan is ready to store Iranian enriched uranium if US-Iran agreements are reached, citing the country’s IAEA-controlled low-enriched uranium bank; Tokayev reiterated Kazakhstan’s role in strengthening nuclear safety. Kazakhstan–Russia Trade: Tokayev told Putin bilateral trade is nearing record levels and could top $30B soon; Russia is also Kazakhstan’s biggest FDI source (about $29B), with 177 joint projects worth around $53B. Food Prices: Kazakhstan saw a sharp lamb price jump—up 2.5% in a week—raising fears of the biggest monthly increase in over a decade, amid export quota effects on beef. Regional Business Links: Turkestan and Tashkent regions held a “Cooperation Without Borders” forum to expand trade, investment and tourism, including industrial cooperation under the “Central Asia” center initiative. EAEU Trade Outlook: Tokayev said EAEU internal trade could exceed $100B this year as the bloc continues growth.

Armenia-EAEU Pressure: Russia recalled its ambassador to Yerevan for “consultations” after Armenia deepened EU ties, warning that EU alignment could undermine cooperation inside the Eurasian Economic Union. EAEU Politics: Putin urged Armenia to hold a referendum choosing EU or EAEU, while EAEU leaders backed the referendum idea and discussed potential consequences if Armenia’s participation is suspended. Nuclear Deal Angle for Kazakhstan: IAEA chief Rafael Grossi said Kazakhstan is ready to store Iran’s enriched uranium stockpile if a nuclear agreement is reached, citing Kazakhstan’s low-enriched uranium “bank.” Oil & Energy Risk: Reuters reported an accident at Kazakhstan’s Tengiz field that sharply cut output and may take about a week to restore, affecting Caspian Pipeline Consortium shipments. Pharma Investment: Kazakhstan’s pharmaceutical investment rose to $142.8m in 2025, with the domestic medicines share reaching 15% and traceability/labeling lifting local presence. AI Push: Kazakhstan is positioning 2026 as the Year of AI and Digital Development, with a Data Center Valley plan and large-scale education rollouts. Trade Corridors: Uzbekistan and Kazakhstan signed a roadmap to expand trade and investment across sectors including logistics, energy, chemicals, pharma, and agriculture. Africa-Asia Logistics: Kazakhstan and Kenya explored linking the Middle Corridor to East African ports (Mombasa, Lamu) and discussed an Astana–Nairobi air link to speed cargo flows.

Nuclear & Energy Security: Kazakhstan says it is open to storing Iran’s enriched uranium stockpile under an IAEA-controlled setup, with IAEA chief Rafael Grossi telling the Financial Times that Astana signaled “openness” after talks with President Tokayev. Iran Deal Watch: US President Donald Trump still hasn’t made a final call on extending the Iran ceasefire, linking any deal to reopening the Strait of Hormuz and strict nuclear redlines. EAEU Politics: At the Astana summit, EAEU leaders adopted a statement urging Armenia to hold a nationwide referendum on EU membership versus staying in the EAEU, warning of major economic risks; Putin said Armenia could lose at least 14% of GDP if it quits the bloc. EAEU Integration & Business: Kazakhstan used its EAEU chairmanship to push digital transformation, transport connectivity and AI at the Eurasian Economic Forum, while leaders reiterated trade growth targets and common-market progress. Trade & Logistics: Cargolux is resuming cargo flights to Kazakhstan from June 1, and Kazakhstan’s energy ministry says there’s “no alternative” to the CPC pipeline for most oil exports, though Baku-Supsa is being considered as an additional route. Finance: VTB raised short-term ruble deposit rates, with top rates up to 14% for salary/pension clients.

EAEU Summit in Astana: Kazakhstan’s Tokayev said EAEU mutual trade should top $100bn this year, after exceeding $95bn in 2025, with bloc GDP growth forecast at ~2.5% in 2026-27. Armenia Pressure: Russia, Kazakhstan, Belarus and Kyrgyzstan backed a referendum in Armenia on EU membership vs staying in the EAEU, warning of “significant risks” and saying a report on possible suspension consequences will be presented in December. Nuclear Deal Watch: A key unresolved issue remains financing details for Russia’s planned $16.5bn nuclear power plant on Lake Balkhash, even as agreements on cooperation were signed during Putin’s visit. AI & Digital Trade: The EAEU forum in Astana pushed responsible AI and practical use in customs, logistics and industry, while leaders backed ethical, non-discriminatory AI adoption. New EAEU Trade Moves: Documents signed in Astana include starting free-trade talks with Tunisia and Serbia, plus updates to agriculture, electricity-market and natural-monopoly rules. UAE Joins the Forum: UAE trade minister Thani Al Zeyoudi highlighted paperless logistics and route upgrades, citing growing non-oil trade with the EAEU and Kazakhstan. Kazakhstan Finance: AM Best affirmed Halyk-Life’s ratings (B++/bbb) with a stable outlook, citing strong capital and conservative investments.

Kazakhstan–Russia Deal Flow: Presidents Tokayev and Putin held expanded talks in Astana and presented a pipeline of trade and industrial projects: 3,500 joint ventures and 17,000+ firms with Russian capital in Kazakhstan, plus 177 joint projects worth $52.7bn and 60,000+ jobs, spanning metallurgy, petrochemicals and mechanical engineering. Nuclear Power: Russia signed an agreement with Kazakhstan to build the Balkhash nuclear power plant, with a reported $16.5bn price tag and an export loan covering about 85% of costs; the project is set near Ulken on Lake Balkhash. EAEU Politics & Armenia: The EAEU summit agenda in Astana includes Armenia’s future in the bloc; Russian officials said the issue will be discussed despite Yerevan’s non-attendance, while Moscow warned of possible revisions to gas and other strategic supply terms if Armenia moves toward the EU. Digital Sovereignty & AI: Kyrgyz President Zhaparov pushed for shared EAEU digital sovereignty via joint data centers and computing; Tokayev used the forum to stress AI security and education reform as AI could affect up to 40% of jobs globally. Currency Policy: Kazakhstan’s National Bank said there’s no need for currency interventions, calling the tenge stable and driven by market processes. Trade Diversification: Kazakhstan’s exports to the UAE rose 42.1% in Jan–Mar 2026 as talks focused on logistics, agro-processing and financing, including Islamic finance cooperation. Energy Exports Watch: Kazakhstan is evaluating the Baku–Supsa pipeline as a potential oil export route amid reduced exports tied to Tengiz output and transport constraints. Banking Update: VTB Group reported IFRS net profit down 1.8% year-on-year for Jan–Apr, with April profit up 24.3%. Sports & Tourism: Kazakhstan-linked interest was noted for the Asia-Oceania Sambo Championships in the Philippines, with the event expected to draw 31 countries.

Nuclear Deal: Russia and Kazakhstan signed an agreement in Astana to build the first nuclear power plant in Kazakhstan (Balkhash NPP), with investment of about $16.5bn and Russian export-credit financing; Rosatom is set to lead construction, while Kazakhstan expects commissioning around 2035-36. EAEU & AI Policy: Armenia backed EAEU joint initiatives on “responsible AI,” calling for shared principles on ethics, security, transparency, and human oversight. Russia-Kazakhstan Trade & Finance: During Putin’s visit, both sides signed a package of deals including a ruble-tenge currency swap and cooperation steps; Russia said it is among Kazakhstan’s leading investors with capital nearing $30bn. Logistics Digitalization: Kazakhstan and Russia launched a pilot driverless freight transport route, alongside broader efforts to cut logistics and customs processing times. Transport Corridor: Kazakhstan plans to boost container traffic on the Middle Corridor to 10m tons by 2030, targeting faster, more synchronized transit via the Trans-Caspian route. Credit Rating Reform: Kazakhstan adopted a legal framework for credit rating agencies, aiming to improve transparency and investment attractiveness. Uzbekistan Trade: Uzbekistan’s foreign trade hit $26.3bn in early 2026, but the trade deficit widened sharply as imports rose and gold exports fell.

Kazakhstan–China Strategic Push: President Tokayev met China’s top legislator Zhao Leji, stressing the “eternal comprehensive strategic partnership” as trade hit a record $49bn and Chinese investment in Kazakhstan topped $29bn. VTB Capital Markets Watch: VTB’s supervisory board recommended 2025 dividends of 9.71 rubles per share (125.5bn rubles total) and shareholders will also consider a capital increase via an additional share issue. Korea–Central Asia Energy Talks: South Korea’s national security adviser Wi Sung-lac is set to visit Kazakhstan to discuss energy supply chains ahead of a Korea–Central Asia summit. Russia Visit Meets Eurasian Agenda: Putin’s state visit to Astana continues with talks and document signings, followed by Eurasian Economic Forum discussions focused on AI and digitalization. Balkhash Nuclear Project Timeline: Kazakhstan says active construction of the Balkhash NPP will start in 2027, with possible intergovernmental agreements on construction and financing during Putin’s visit. Trade & Transport Signals: Kazakhstan–Russia trade remains a key pillar, with imports rising sharply in Q1 2026 and rail freight volumes up. Digital Connectivity: CMI plans a new Central Asia-to-Hong Kong submarine cable route via Kazakhstan and Uzbekistan to boost data transmission. Regional Security Diplomacy: A national security adviser from South Korea will coordinate preparations for the September summit with Kazakh officials.

Putin’s Kazakhstan Trip: Russian President Vladimir Putin arrived in Astana for a May 27-29 state visit and will join the Eurasian Economic Union summit, with talks expected to focus on trade, energy and regional integration. Nuclear & Energy Deals: The Kremlin says two intergovernmental agreements for Kazakhstan’s first nuclear power plant are prepared for the visit, with Rosatom involved. Russia-Kazakhstan Trade: Kazakhstan’s trade turnover with Russia rose 16% in Q1 2026 to $6.46bn, driven by higher Russian imports including uranium and natural gas. China-Kazakhstan Push: China’s top legislator Zhao Leji met Tokayev and Kazakhstan’s parliament leaders, calling for deeper cooperation in investment, energy, minerals, connectivity and digital economy. Digital Connectivity: China Mobile International plans a new route linking Central Asia’s terrestrial cables to Hong Kong’s submarine network via Kazakhstan and Uzbekistan. Sanctions & Aviation Parts: A report says Russia keeps commercial aviation near pre-war levels via re-export networks, with Kazakhstan among exporters of restricted aircraft components. Fuel Price Watch: Analysts warn Kazakhstan fuel prices may rise amid refinery constraints and market distortions, a politically sensitive issue after the 2022 LPG unrest. EAEU-Armenia Tensions: Russian officials say no restrictive measures against Armenia are expected at the Astana summit, while Moscow warns Armenia’s EU path creates uncertainty for investors.

Aviation & Connectivity: AZAL will launch Shymkent–Baku flights from June 16, operating twice weekly, and KMG-Aero will provide “wing-to-wing” refueling at Shymkent under international safety standards—another step in Kazakhstan’s push to deepen regional air links. Digital Talent Policy: Kazakhstan approved a “Digital Nomad Residency” pilot in Astana and Almaty, letting ICT specialists apply online for permanent residency via astanahub.com and public service centers. Citizenship & Migration: Requests to renounce Kazakh citizenship have fallen nearly 40-fold over eight years, with 43 cases recorded this year. Energy & Geopolitics: Russia warned Armenia it could halt gas, oil products, and rough diamond supplies if Yerevan continues EU accession—raising pressure inside the wider Eurasian alignment debate. Regional Tech Ambition: Kazakhstan’s Alatau City is moving from concept to testing, with drone delivery partners and an urban air mobility test center opening in Alatau. Local Culture: Shymkent residents drew attention from documentary screenings tied to national priorities like Aral Sea restoration.