AGP Executive Report

Middle Corridor & logistics: Hong Kong’s airport chief says Central Asia could become the city’s next logistics hub as cargo volumes surge and passenger traffic may rebound toward pre-Covid levels, with Kazakhstan positioned at the center of new transit demand. Aviation policy: IATA urges Uzbekistan to adopt a unified aviation strategy and airport master plan, warning that rapid airline growth without safety discipline is driving long delays and shutdowns. Energy & oil markets: OPEC+ meets to consider higher quotas, but analysts say the Iran-linked Strait of Hormuz disruption limits how much output pledges can cool prices—Kazakhstan is among the few members with spare capacity. Monetary policy: Kazakhstan’s National Bank cut the base rate to 17% and expects inflation to land in a 9–11% range in 2026, trending toward the 5% target by 2028. Housing & public finance: Turkistan region handed keys to 3,564 families and expects 2,292 more this year, with housing registration and allocation now routed through Otbasy Bank. Trade & investment: Kazakhstan and Hong Kong partners plan to boost agricultural exports across Asia, using Hong Kong as a gateway for soybeans and processed products. Nuclear cooperation: Kazakhstan’s Atomic Energy Agency signed an MoU with Russia’s Kurchatov Institute on peaceful nuclear research, reactor technologies, nuclear medicine, and training.

Middle Corridor Shipping: Kazakhstan has started building its first specialized container ship (two vessels planned) at Baku Shipyard, aiming to boost Caspian Sea capacity and strengthen the Trans-Caspian route by end-2027. Central Bank & Inflation: The National Bank cut Kazakhstan’s base rate to 17% and expects 2026 inflation at 9–11%, citing a stronger exchange rate and slower consumer lending. Housing & Finance: Turkistan region handed keys to 3,564 families, with another 2,292 expected this year; from May 24, 2025, housing waiting lists and allocations are handled via Otbasy Bank. Astana Budget: Astana’s budget revenue plan rises to 111.4bn tenge, with extra spending for transport, utilities, and greening. Tenge Deposits: Tenge deposits grew 13-fold over 10 years, with Almaty holding the biggest share of household deposits. Trade & Exports: Kazakhstan and Hong Kong partners are set to promote Kazakh agricultural exports across Asia, including soybeans, using forward contracts and logistics support. Nuclear Cooperation: Kazakhstan’s Atomic Energy Agency signed an MoU with Russia’s Kurchatov Institute on peaceful nuclear research, reactor tech, nuclear medicine, and training. Governance Reform: Tokayev signed constitutional laws launching the Vice President role, Kurultai powers, and the People’s Council, as part of political reforms.

Judicial Reform: President Tokayev says Kazakhstan’s administrative justice is changing court practice by making authorities prove the legality of their actions, with statistics showing over half of rulings now favor citizens and businesses. Investment Climate: Tokayev highlights the AIFC’s English-law court/arbitration setup, the Investment Headquarters’ fast issue-solving, and a new investor-rights protection committee under the Prosecutor General—aimed at keeping Kazakhstan Central Asia’s top foreign-investment magnet. Monetary Policy: The National Bank cut the base rate to 17% as inflation cools and the outlook strengthens, lifting the 2026 GDP growth forecast. Cross-border Business: A Kazakhstan–Cyprus business forum in Astana (with Freedom Holding as strategic partner) targets deals in trade, logistics, agriculture, AI/fintech, and investment. Regional Security: At an SCO interior ministers meeting in Bishkek, Pakistan urged stronger cooperation against terrorism, cybercrime and drugs, while signing agreements with Russia on illegal immigration and narcotics. Trade & Tourism Links: Malaysia launched Central Asia MICE roadshows in Almaty and Tashkent to grow event travel and bilateral trade. Agri Exports: Kazakhstan signed a Hong Kong partnership to expand grain, oilseeds, legumes and wheat-flour exports across Asia-Pacific, including soy initiatives.

Monetary Policy: Kazakhstan’s National Bank cut the base rate to 17% (±1pp), citing easing May inflation (10.4%) and a stronger outlook, while upgrading 2026 GDP growth to 4.5–5.5%. Constitutional Reform: President Tokayev signed constitutional laws bringing in a Vice President role, setting up the Kurultai (145 deputies) and the Kazakhstan People’s Council, plus new rules for the capital and administrative-territorial structure. Energy & Trade Links: Kazakhstan’s Middle Corridor gets a boost as the Baku–Tbilisi–Kars railway moves to full operation, supporting freight flows between China and Europe. Business & Investment: The Kazakhstan–Cyprus Business Forum in Astana (backed by Freedom Holding) focused on logistics, agriculture, IT/AI, fintech, and investment. Regional Finance Cooperation: Kazakhstan’s banking ecosystem is set to connect further via the Baku International Finance and Banking Summit (June 9–10), aimed at harmonizing regulations and payment systems across Turkic states. Water Security: Kazakhstan has sent 6.16bn cubic meters of water to the Caspian Sea since early 2026, alongside implementation of the new Water Code pushing recycled water plans.

Monetary Policy Update: Kazakhstan’s National Bank says inflation eased to 10.4% by end-May 2026 and reports record FX reserves of $65.4bn, alongside a rise in business activity (May BCI 11.9; business activity index 51.6). Investor Protection Reform: Prosecutor general is set to gain investment ombudsman status, with regional investment prosecutors tasked to protect investors’ rights under amendments. Digital Finance & Funding: A Majilis deputy backs tokenization to simplify business access to investment, while the National Bank highlights a growing digital-asset legal regime and pilots including stablecoins and real-asset tokenization. AI Push: OpenAI data places Kazakhstan top in Central Asia for generative AI use per capita (15.9% in Q1 2026), citing government policy and education investment. Education Infrastructure: Kazakhstan plans 96 new schools by year-end and a multi-year renovation drive covering 1,300 schools, with digitalization and inclusive education expanding. Regional Connectivity & Trade: Air Astana adds seasonal Astana–Larnaca flights and launches Astana–Guangzhou direct service, while Kazakhstan–Hong Kong ties deepen via trade, gold market plans, and a growing air/finance bridge. Middle Corridor Logistics: First Deputy PM Nalibayev reviews Kostanay projects including the Tobyl transport and logistics complex, aimed at boosting container traffic and jobs. International Cooperation: Kazakhstan and Cyprus move ahead on agreements and cooperation, and Kazakhstan reaffirms readiness to support Gaza’s social infrastructure rebuilding.

Kazakhstan–Cyprus Deal Push: President Nikos Christodoulides’ first official visit to Kazakhstan is already translating into business momentum: Astana and Nicosia signed multiple cooperation agreements (education, tech, cybersecurity, e-government) and opened embassies, while a Kazakhstan–Cyprus business forum in Astana—backed by Freedom Holding Corp.—focused on logistics, agriculture, fintech, AI, and investment. Middle Corridor Boost: The Baku–Tbilisi–Kars railway has entered full commercial operation after upgrades in Georgia, raising freight capacity to 5 million tonnes a year—strengthening Kazakhstan’s role as a China–Europe transit hub. Digital Health Expansion: Healthy4U is moving into Kazakhstan with an AI preventive-care platform, working with local institutions and aligning with data localization and regulatory expectations. Tech & Finance Pressure Points: A financial analyst warns Kazakhstan’s state data centers are priced beyond many businesses, pushing firms toward foreign cloud providers; separately, Freedom Holding applied for a French banking licence as it seeks European expansion. Trade & Connectivity: Hong Kong signed 96 agreements worth $1.65bn with Kazakhstan and Uzbekistan, including steps toward new direct routes. Policy Watch: Kazakhstan’s new Constitution will trigger a shift to a unicameral Kurultai and parliamentary elections expected in August.

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.