Kazakhstan: Analysts Warn of Slowdown in Domestic Trade by End of 2025

Domestic trade, a driver of Kazakhstan’s economic growth, may slow sharply by the end of 2025 due to a decline in real household incomes, Orda.kz reports.

According to a new review by Halyk Finance, domestic trade currently accounts for 16.4% of Kazakhstan’s GDP and grew by 8.8% in the first three quarters — well above the 2024 target. However, analysts note that the sector’s momentum is already fading.

Annual growth is being driven mainly by non-food and industrial goods, which make up 81.9% of wholesale sales. Growth in this segment reached 13.5% year-on-year, while wholesale food sales showed zero growth,
said Arslan Aronov, Senior Analyst at Halyk Finance.

The report attributes growth in wholesale trade to stronger activity in the mining sector, higher investment levels supported by state funding, and the low base effect from the previous year.

Another structural factor is the heavy regional concentration of wholesale activity.

Three regions — Almaty (35.4% of wholesale turnover), Astana (15.3%), and Atyrau Region (14.2%) —account for about 65% of total wholesale trade. This reflects the concentration of economic activity in business and administrative centers, as well as in the mining sector,
 Aronov noted.

Retail trade also expanded by 7.1%, but analysts question the sustainability of this growth. Real wages increased by only 0.3%, while real incomes fell by 1% in the first half of the year.

Meanwhile, the National Bank and the Agency for Regulation and Development of the Financial Market (ARDFM) continue to tighten lending conditions, maintaining a base rate of 18%.

We expect both wholesale and retail trade growth to slow by year’s end due to the fading low base effect, falling real incomes, slower consumer lending, and reduced transfers from the National Fund,
summarized Arslan Aronov.

Additional pressures include new customs duties on purchases from foreign online stores and rising loan interest rates, which could further dampen consumer demand.

Analysts believe these factors make zero growth in retail trade by the end of 2025 a likely scenario.

Original Author: Nikita Drobny