The commodity-dependent Kazakh economy experienced one of its toughest years in 2016 as a result of low oil and other commodity prices together with a slowdown in major trading partners China, Russia and the EU.

Following the plunge in oil prices, the Kazakh economic growth eased sharply from 4.2% in 2014 to 1.2% in 2015 and 1% in 2016. While growth was originally expected by the government to slow down to 0.5% in 2016, it was boosted by an increase in oil production thanks to the launch of the giant Kashagan oilfield at end October.

But after nearly two years of economic slowdown, Kazakhstan is widely expected to turn the corner in 2017. Such projections are visible in both outlooks by international observers and the Kazakh government’s expectations. Following OPEC’s push to raise world oil prices, the hydrocarbon-reliant Central Asian country’s growth is mainly contingent on gradually ramping up its oil production to its previous levels.

GDP data showed Kazakh economy growing by 4.1% in January-April 2017, while higher-than-expected oil prices may push Kazakh GDP growth to 2.8% this year, above the government’s recently updated forecast of 2.5%.

Continued acceleration in growth is expected to be driven by the impact of structural reforms focused on the business climate and public administration and an unlocking of bank lending.

Bankers expect exports to continue improving thanks to the Kashagan oil project which finally resumed its operations in October, as export revenues from the field will support the balance of payments. Sberbank projects a current account deficit of $1.5bn deficit in 2017, based on the assumption of a mild rise in oil prices.

Oil production in 2015 declined by 1.7% to 79.6mn tonnes and went down further to 78mn tonnes in 2016, accounting for Kashagan. However, the government expects Kashagan to add between 4mn-7mn tonnes of oil to the country’s production, bringing up the country’s overall production plans to approximately 85mn tonnes.

The IMF has urged the government to pay special attention to agriculture and transportation sectors within its overall modernisation and diversification planning. The institution projects annual growth to reach 2.5% in 2017. Yet, vulnerabilities remain in the financial sector weakness, which should be addressed.