Kazakhstan macro: economic growth backed by rapidly expanding domestic credit to decelerate
According to the Ministry of National Economy’s flash estimate, the nation’s GDP grew by 6.5% y-o-y in 8M25. Earlier, the Ministry estimated economic growth in 7M25 at 6.3%. Prior to that, the Bureau of National Statistics reported that GDP grew by 5.6% and 6.2% y-o-y in 1Q25 and 1H25, respectively. Even though the latter figure was also a flash estimate published last month, the final print won’t differ much because it was well in line with the numbers presented by the Ministry of National Economy. Given this year’s unexpectedly rapid GDP growth, the consensus that growth will likely slow next year is not surprising.
Several factors fueled economic growth this year. The relatively fast and stable growth of retail sales in recent years was largely driven by rapidly expanding credit to households. Putting together available statistics one can conclude that the growth in retail sales lagged the much faster growth in household credit. The latter’s m-o-m growth well outpaced m-o-m inflation, as well. Over a decade, credit to the government and households has expanded much faster than credit to other segments. In recent years, however, the nation’s corporate sector has also become addicted to bank credit.
Such a rapid expansion of credit (to households in particular) is unsustainable and poses risks, even though the negative effects could be short-lived in the case of various shocks. Total household credit currently stands at about 20% of GDP. However, the risks stem not only from this ratio but also from a stock/flow combination, i.e., high interest rates combined with low stock, as interest rates are in the double-digits and vary depending on maturity and other terms. The economy has become more sensitive to external shocks, which could affect not only government finances, but also the ability of private borrowers to service debt.
Therefore, the government’s thriftier 2026 budget is generally aimed at reducing such risks. More moderate budgetary spending next year and targeted disinflation should gradually reduce borrowing costs. However, the Kazakh economy may appear quite vulnerable in the case of any significant external shock in 2026.
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