Kazakhstan’s private sector showed strong activity in Q1 2025. Businesses produced goods and services worth KZT 26.5 trillion — an impressive number at first glance. But when you dig deeper into the financials, the picture becomes more complex.
The country’s economy still leans heavily on large and medium-sized enterprises. Their key results for the first quarter:
• Production output: KZT 16.5 trillion
• Revenue: KZT 22.5 trillion
• Cost of goods sold: KZT 16.6 trillion
• Gross profit: KZT 5.9 trillion
• Net profit: KZT 4.2 trillion
• Profitability: 18.3%
These figures indicate healthy margins. But beneath the surface, material costs alone make up over 52% of total expenses. Add in labor costs (13.9%) and depreciation (15.6%), and the room for profit begins to narrow. Meanwhile, total liabilities reached KZT 81.3 trillion — with only 0.6% overdue, but still a factor to watch.
The numbers signal resilience but also vulnerability. Rising costs and mounting debt pressure mean businesses are finding it harder to scale without taking on risk. Long-term capital access and stable lending conditions will be key for sustainability.
Small businesses reported:
• Output: KZT 10 trillion
• Revenue: KZT 19.1 trillion
• Net profit: KZT 2.5 trillion
• Gross profit: KZT 6.7 trillion
However, despite making up over 339,000 registered entities, small enterprises remain structurally fragile. Their average monthly salary is KZT 333,000, and only 20.6% of their expenses go toward materials — suggesting many are focused on trade and services, not production.
In Q1 2025 small businesses employed 1.53 million people — nearly a quarter of the country’s workforce. But headcount declined from the previous year. This could mean rising automation or a shift to informal employment. Either way, it reflects structural shifts in the labor market.
Large enterprises didn’t report staffing numbers, but their high wage-related expenses suggest growing pressure to retain skilled labor. That’s both a cost risk and a potential economic driver through consumer spending.
Total assets of large and medium-sized enterprises reached KZT 163.2 trillion, with 63% in long-term holdings. This capital intensity signals deep investment — but also limited liquidity if firms need to pivot quickly.
Receivables amounted to KZT 20.8 trillion, with 3.1% overdue. That’s manageable, but worsening payment cycles could trigger broader credit risks.
Kazakhstan’s economy still depends on big players — often in resource-heavy industries. But real diversification and inclusive growth will require a thriving small business sector. Today, small enterprises are generating revenue, but they lack financial depth, technological capacity, and investment resilience.
What policymakers should consider:
• Offer targeted but streamlined support programs for small businesses — especially those tied to job creation or digital adoption.
• Consider easing payroll tax burdens temporarily to address rising labor costs.
• Encourage business upgrades from low-productivity service models to tech-oriented, export-driven models.
What Businesses Can Do Now
1. Review cost structures. Large firms spend more than half their budget on materials; small businesses, far less. Joint procurement or local sourcing partnerships could help both.
2. Invest in workforce productivity. Wages are rising, and that can help attract talent — but only if productivity keeps up.
3. Manage receivables proactively. Cash flow management will be vital in 2025. Even small delays in payments can hurt growth.
Kazakhstan’s economy is holding steady — but not all sectors are thriving equally. The data shows profitability and production growth, but also rising pressure on costs, payroll, and working capital. Small business remains the weakest link.
This isn’t a crisis. But it’s a clear wake-up call. Now is the time to act — while the window of opportunity is still open.
