(EnergyAsia, March 28 2017, Tuesday) – US ratings agency Moody’s said Kazakhstan has been more resilient than Azerbaijan in adjusting to the collapse of oil prices since mid-2014.


While both countries are heavily dependent on oil and gas for revenues, Kazakhstan has shown greater economic diversification, stronger institutions and lower debt levels than its Central Asian neighbour.

“Azerbaijan is more vulnerable to the low oil price, given that its economy is more than three and a half times smaller and half as wealthy. Kazakhstan has also made more progress addressing business climate challenges and other structural impediments to growth,” said Moody’s.

Oil and gas accounted for 89% of Azerbaijan’s merchandise export earnings and 26% of nominal GDP in 2015, and provided 60-70% of consolidated government revenues.

In contrast, oil and gas comprised 76% of Kazakhstan’s merchandise export earnings and 18% of nominal GDP while contributing to 42% of consolidated government revenues.

“Kazakhstan’s institutions are stronger than those of Azerbaijan, allowing for more effective policy responses,” said Moody’s. It cited Kazakhstan’s smoother transition to a floating exchange rate and rapid monetary policy response, enabling it to more effectively manage the oil price decline.

On the geopolitical front, Kazakhstan has played a deft hand in maintaining good relations with its two powerful neoighbours, Russia and China, as well as with the US and the European Union. Azerbaijan has been unable to resolve an ongoing conflict with Armenia over the disputed territory of Nagorno-Karabakh, adding further to its economic burden.