How the economy of the Nur-Sultan city has changed in 23 years | FinReview
6 July 2021

How the economy of the Nur-Sultan city has changed in 23 years

Over the 23-year history, the city of Nur-Sultan has transformed from a provincial town into a megalopolis of millions, the center of the Eurasian space.

The capital of Kazakhstan, the city of Nur-Sultan, turns 23 this year. During this period, the city has gone from a provincial town with a population of 275 thousand people to a million megalopolis, the center of the Eurasian space.
Our capital is the only one in the XXI century that was built in ten years, and Kazakhstan is the only state that built a new capital at the turn of two centuries.

On the eve of the holiday, analysts we studied the historical path of the capital of Kazakhstan.

The nominal GRP of the capital increased by 303 times

It is easier to judge the economic state of the region by the main macroeconomic indicators, such as the gross regional product, business activity, employment, the volume of attracted investments, the state of small and medium-sized businesses.

According to the level of GRP, it is possible to assess the economic situation in a particular point of the country and understand which industries can be considered leading for the economy of a particular region. In 2020, its value in the city of Nur-Sultan amounted to 7.81 trillion tenge and increased by 303 times compared to 1997. In monetary terms, GRP indicators have been continuously growing for twenty-two years, having slightly decreased in 2020.

An interesting trend can be traced in the structure of GRP. In 2020, the production of goods gave the capital 14% of the total GRP, and the production of services-81%. The rest is taxes on products. The GRP structure has been maintained at approximately this level since the mid-2000s.

In other words, services of various types – trade, car repairs, real estate transactions, finance and insurance-give the capital more added value than production.

The real growth of the GRP of the capital, that is, taking into account inflation, changed in different directions against the background of global economic challenges. In the 2000s, the indicator grew in double-digit dynamics, but due to the financial crisis of 2008, it slowed down to “minuses”. It was possible to restore the dynamics by 2010, but not for long — the currency crisis of 2014-2015 also affected the growth indicator.

To overcome the consequences of crises and achieve sustainable economic development, the Government has developed such state programs as the Employment Roadmap, Business Roadmap and Nurly Zhol. The implementation of these programs has allowed the country to reduce the negative burden that persists on world markets, strengthening the business activity of the population.

The capital’s business sector forms about 50% of GRP

The number of operating legal entities in the city of Nur-Sultan as of June 1, 2021 amounted to 59,545 enterprises. In comparison with 1999, from which the data of the Bureau of National Statistics is recorded, their number has increased by 13 times.

Most of the enterprises are represented in trade, construction, education, telecommunications, and manufacturing.

It is the business sector that is the main employer in the capital – every third resident of Nur-Sultan is employed here, and their activities form about 50% of GRP. Accordingly, entrepreneurship provides about half of tax revenues. This is the highest indicator among the regions.
It is important to note that the official unemployment in the city of Nur-Sultan has been steadily decreasing since 2001, and this despite the fact that the labor force is growing rapidly. However, experts often attribute this to the peculiarities of the labor accounting system. Kazakhstanis without permanent employment, with low incomes and without contributions to the pension fund are displayed in statistics as self-employed if they are not officially registered as unemployed.

But even their share is gradually decreasing — if in 2001 the indicator of the self-employed was about 16% of the total economically active part of the population of the capital, then in 2020 the indicator fell to 11%. This means that the measures taken in the country to support the employment of the population have a positive impact on the state of the labor market and, in particular, on the reduction of unemployment in the city of Nur-Sultan.

The total volume of attracted investments increased 52 times

The next indicator of the economic state of the region under consideration is the inflow of investments. They play a significant role at the current stage of the development of the region’s economy, since they are aimed at increasing production capacities.

Since 2003, the volume of such investments in the city of Nur-Sultan has exceeded 11 trillion tenge. At the same time, about 82% of the funds attracted to the city are extra-budgetary, that is, it is the equity capital of enterprises and borrowed funds.

An important feature of these investment funds is that about 60% of them are formed by small and medium-sized enterprises.
Another important indicator in the economic policy of the capital is foreign direct investment. According to the statistics of the National Bank, from 2014 to 2020, the volume of attracted foreign investments amounted to $ 4.3 billion.

Nur-Sultan — the financial hub of Central Asia

The global economy in 2020 faced an unprecedented shock in the form of a coronavirus pandemic. The spread of the infection led to the mass introduction of quarantine restrictions and the closure of borders, which turned into the largest collapse in global GDP in recent decades. In addition, the consequences of COVID-19 were remembered for the record growth of global debt, negative oil prices, the weakening of the US dollar, as well as the sharp rise in the price of gold and cryptocurrencies.

Now the key task of any country has become to save its economy from the threat of recession. Therefore, competition for investment funds has increased in the global market. But in this race, developed markets are more prepared than developing ones. Their advantage is in the created favorable conditions for doing business and the arrival of investors.

Now the city of Nur-Sultan is developing in this direction. For this purpose, the Astana International Financial Centre was launched in 2018. It was created as a financial institution that promotes the integration of the country and the Central Asian region into global investment and financial markets.
The AIFC has a number of advantages that can stimulate the arrival of investors in the country.

First, a special jurisdiction based on English law has been created on the basis of the AIFC, which is applied in most financial centers of the world and is understandable to investors.

Secondly, the participants of the financial center are provided with tax benefits up to 50 years, simplified currency, visa and labor regimes.
Third, an independent court and an international arbitration center for dispute resolution have been launched and are working, where reputable British judges and lawyers from around the world work.

Fourth, the AIX stock exchange has been created, on which 80 securities have already been listed.

The AIFC is already demonstrating its first and rather high success. During the three years of official operation, more than 860 companies from 53 countries have registered in the financial center. The total volume of attracted foreign investments reached $ 4.5 billion.
8.6 billion US dollars of debt capital was attracted through the AIFC exchange — Astana International Exchange. And the exchange’s issuers have attracted more than $ 321 million of equity capital.

The attracted investments form a pool of promising sectors of the economy from the point of view of capital investment, the development of which gives the greatest multiplicative effect.


In general, all these indicators reflect the dynamic development of the economy of the city of Nur-Sultan. But this is not all the achievements of the capital. The list can be supplemented with such indicators as a three-fold increase in the population, a three-fold expansion of the city’s territory, a 20-fold increase in the volume of housing built.

At the same time, given that the city of Nur-Sultan is the youngest capital of the world, its indicators are an excellent achievement of the republic. And, being one of the geographical centers of the Eurasian continent, our capital has all the prospects of transformation into one of its leading world megacities.