The Rich Save, The Poor Borrow: Expert Describes Kazakhstan’s Economic Model

Kazakhstanis’ money sits in bank deposits but barely reaches the real sector, while the economy grows through debt rather than production, Orda.kz reports.

Economist Eldar Shamsutdinov came to this conclusion in his Telegram channel.

According to his assessment, by 2024 a closed model had taken shape. First, the population gives banks liquidity through deposits, then banks redistribute the money, and the state and business consume it. At the same time, the main flow goes to imports, mortgages and cars.

There is a lot of money in the economy, but it sits in deposits and barely goes to the real sector. The economy has become a consumption economy and grows through debt, not through the expansion of production and income.Shamsutdinov wrote. 

Stratification within the population is growing. Deposits are concentrated among wealthier Kazakhstanis, while less well-off people are increasing their debt burden through consumer loans and mortgages.

According to the economist, the turning point came in 2014–2016. Before that, Kazakhstan was more often a creditor to the outside world. The fixed exchange rate of the tenge led to the accumulation of imbalances, and the release came through devaluations. After that, the population began to save more, and this habit became entrenched.

Shamsutdinov sees a way out in channeling at least 10–15% of the deposit base into shares and corporate bonds. In his view, this would reduce the concentration of risks in banks and give businesses access to capital. But that would require a functioning secondary securities market. For now, it is almost impossible to sell a corporate bond there.

Original author: Ruslan Loginov

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