(Adds quotes from PM Masimov, details, background)
By Raushan Nurshayeva
ASTANA, April 21 (Reuters) - Kazakhstan needs to step up efforts to rescue its economy from the financial crisis, the government said on Tuesday after admitting for the first time that the oil-rich nation was showing signs of recession.
Central Asia's biggest economy, facing its worst slowdown in a decade, contracted by 2 percent in the first quarter from a year earlier compared with growth of 6 percent in the same 2008 period. The government had so far denied any risk of recession.
Addressing a government meeting, Economy Minister Bakhyt Sultanov said Kazakhstan was indeed showing symptoms of recession after a decade of explosive growth.
"First-quarter economic results have shown that the further development of the economy, which is showing signs of recession, depends on the speed of efforts to inject money that has been earmarked by the government," he said.
"In the second quarter it is necessary ... to focus on making sure that state money reaches its recipients to avoid a recession."
Three quarters of consecutive economic decline would officially constitute a recession in Kazakhstan, the economy ministry says. Economists commonly define a recession as two straight quarters of shrinking gross domestic product.
Kazakhstan has allocated $25 billion -- equivalent to a quarter of the value of all goods and services produced in the country -- to rescue the economy and has taken firmer control of business activity to steer troubled sectors towards recovery.
As the economic crisis continues to tighten its grip over Kazakhstan, the government is worried about a potential rise in social tension as industries scale back production.
Prime Minister Karim Masimov, addressing the same meeting, echoed these concerns and urged the government and enterprises to avoid mass layoffs as the country adjusts to lower global demand for its key commodity exports.
"It's quite a big problem and all agencies must push ahead with comprehensive measures to fulfil the anti-crisis plan... particularly when it comes to saving jobs," Masimov said.
The Labour Ministry predicts that up to 135,000 people could lose jobs this year in Kazakhstan, a country of 16 million, as crisis-hit sectors such as banking and construction shed jobs.
By comparison, in neighbouring Russia, about 1.8 million people lost jobs in the first three months of 2009, taking the jobless rate for the quarter to an 8-year high of 9.5 percent.
Sultanov said the government needed to take firm steps to implement reform to boost efficiency and prevent job losses.
He added that package of Chinese loans secured during President Nursultan Nazarbayev's visit to Beijing last week would help buoy the economy. "This should yield results over the next year," Sultanov said.
China's EximBank lent the state-owned Development Bank of Kazakhstan $5 billion while CNPC extended a $5 billion loan to its Kazakh peer KazMunaiGas [KMG.UL] during that visit.
The Kazakh economy grew 3.2 percent last year after expanding at an average rate of about 10 percent in 2000-2007 on the back of booming oil and metals prices, its main exports. (Writing by Maria Golovnina; Editing by Andy Bruce)