Q: According to the World Bank, how does Kazakhstan’s level of poverty compare with the rest of Central Asia and the world? How has the level of poverty recently changed in Central Asia, including in Kazakhstan? What are these changes related to—what factors influenced the decrease/increase in the level of poverty in Central Asia?
William Seitz: Ending poverty is one of society’s greatest and most important challenges. It is the ultimate mandate of the World Bank and the first Sustainable Development Goal, a truly global agreement of 193 countries on the most urgent social and economic priorities.
The World Bank’s latest projection for the poverty rate in Kazakhstan is 15.5%, and when expressed in comparable terms, Kazakhstan currently has the lowest poverty rate in Central Asia. While Kazakhstan was once one of the highest performing countries in the world in terms of poverty reduction, it has achieved more limited progress over the past decade. This is largely due to a series of shocks that have disrupted economic growth and the income generating opportunities it provides. World Bank estimates of the poverty rate suggest it fell from 61% of the population in 2004 to 14% in 2013. But amid the regional economic slowdown and falling oil prices, over the following years the poverty rate climbed to 24% of the population by 2016. A subsequent recovery was cut short by the COVID-19 pandemic in 2020 that again pushed as many as 2 million Kazakhs into poverty, with poverty rates rising around the world. Thankfully, in Kazakhstan this proved temporary in most cases, and the poverty rate began falling again in 2021.
This pattern—spurts of progress followed painful reversals—highlights the importance of a social safety net to prevent people falling into poverty during economic downturns.
Q: How is poverty calculated and how have these methods changed over recent years? What poverty line does the World Bank use for Kazakhstan? How does that poverty line compare with other countries in Central Asia?
There are two common types of monetary poverty measures: national poverty measures and internationally comparable poverty measures. The global poverty estimates monitored by the World Bank are, on purpose, distinct and separate from those that are maintained by national governments. The main reason for having two sets of indicators is comparability of methods. A government’s poverty monitoring approach will always focus on the country’s local circumstances. But because they are so tailored to a specific context, these national measures are not comparable with practices in other counties. Comparisons across countries require a harmonized approach, such as that conducted by the World Bank.
The World Bank updated all its poverty estimates this year with a new set of poverty lines, and at the same time, it has also started using the latest global estimates of the cost-of-living adjusted poverty measures for local conditions to make them fully comparable. This is rarely used in Central Asia. For lower middle-income countries such as Tajikistan, Uzbekistan, and the Kyrgyz Republic, the poverty line was 588 tenge per person per day in 2021, and for upper middle-income countries like Kazakhstan, the poverty line was 1,103 tenge per person per day.
Q: What does distribution of wealth between the regions and urban areas look like in Kazakhstan? How big is the gap in the indicators, and why is that?”
Both the concentration of wealth and the related concept of income inequality rank very highly among citizen’s concerns in Kazakhstan and the other countries in Central Asia. More than 90% of respondents to the World Bank Listening to Kazakhstan survey said that income inequality was a serious challenge for the country in September 2022.
But Kazakhstan ranks among the most equal countries in the world with respect to income measured in household surveys. Its Gini index value was just 0.294 in 2021, suggesting income is very equally distributed. This apparent puzzle—high levels of concern about inequality with relatively low measured inequality—is due at least in part to the challenge of getting a fully accurate statistical measure of income. Underreporting of income among very high earners and a low labor income share (labor income accounts for just 41% of all income compared to the regional average of 55%), means that alone, survey-based measures of inequality provide an incomplete picture.
According to the World Inequality Database which adjusts for data often missing in surveys, the top 1% of adults receiving income in Kazakhstan accounted for 15%of total income in 2021, nearly as much as the poorest half of the population combined (accounting for around 16% of total income). The contrast in wealth inequality is even more stark, with top 1% accounting for nearly 30% of the wealth compared to just 5% for the bottom half of the population combined.
As you noted, inequality can also be linked to regional differences and rural-urban disparities. These tend to be larger in Kazakhstan than many benchmark countries. In 2022, the highest income region (Аtyrau) recorded 3.5 times the average income of the lowest region (Turkestan). In contrast, other large countries such as Canada, the United States, and Australia see less of a disparity, typically below a multiple of two. Other measures of wellbeing are notably lower in rural areas where access to services is limited. Rural areas tend to have lower educational attainment, lower average incomes, poorer access to clean water and sanitation, less access to good heating options, local roads that are less often maintained, and higher poverty rates. These are always challenging issues to address in large countries with low population density, like Kazakhstan, and the national development strategy focuses in large part on how to provide a basic package of services and access to opportunity to areas that lag the economic dynamism of the largest cities in the country.
The Human Capital Index for Kazakhstan reveals striking contrasts in education quality. Students from economically disadvantaged families lag behind their advantaged peers by the equivalent of as much as three years of schooling. When the index was last measured, a child born in Kazakhstan was expected to attain 63% of potential human capital (compared to the OECD average of 74%). But a child born in the poorest quintile was expected to attain just 53%, a full 10 percentage points less.
Q: What are the forecasts of the World Bank on poverty rates in the countries of Central Asia and in particular for Kazakhstan over the coming years? What is your forecast based on? What are some of the risk factors for increased poverty rates in Kazakhstan in the future?
The team at the World Bank expects poverty to fall in Kazakhstan and throughout Central Asia over the coming years. There are several sources of information we use to assess this, but the most important factor is the expectation of continued economic growth in the region. Growing economies provide more income generating opportunities for people, and income from work is far and away the most important factor that reduces poverty. Growth also creates additional resources that can be used to support people who are left behind. Taking these points into account, if Kazakhstan can maintain strong economic growth, the World Bank expects the poverty rate in Kazakhstan to fall to around 12% by 2024, and by even more if measures are taken to accelerate growth and access to opportunity among the poorest in society. The risks to Kazakhstan’s poverty reduction aspirations are linked to the country’s resilience to shocks. Past economic downturns have led to large increases in the poverty rate. Strengthening the social safety net so that it responds quickly to these downturns to prevent people falling into poverty is one of the most important ways the country could ensure continued progress over the coming years.
