Understanding credit flows in Kazakhstan’s economy in 2025

In 2025, lending became a sensitive topic in Kazakhstan for several reasons at once. Inflation stayed high, monetary policy settings changed more than once, and yet credit activity in the economy remained strong. At first glance, this looks strange. If money gets more expensive, demand for loans should fall. But this view is too simple.

To understand what is really happening, it is important to separate stocks from flows. The loan portfolio reflects decisions made in the past. New lending reflects decisions made today. These two move at different speeds. That is why any serious analysis of 2025 should focus first on credit flows, not just the size of the portfolio. Only then does it make sense to compare them with interest rates and the broader macro picture.

By the end of the first 11 months of 2025, total assets of second-tier banks reached 68.3 trillion tenge. Expected nominal GDP for the year is around 161.9 trillion tenge. This means banking assets equal about 42 percent of GDP.

Compared to developed economies, this looks modest. In many countries, banks and credit take up a much larger share of GDP. But this comparison alone does not answer whether this is good or bad. The right level of financial depth depends on institutions, structure, and history. In some economies, deep credit markets support long-term investment. In others, they signal overheating and fragile balance sheets.

For Kazakhstan, the picture is mixed. The banking system is already large enough for interest rate decisions to matter. At the same time, financial depth is still limited. Credit mostly supports short-term circulation and stability, not long-term investment growth.

Inflation in 2025 remained stubborn, and monetary conditions stayed tight. Against this backdrop, a popular claim keeps coming up: “If lending is still growing, the base rate must be ineffective.” This is misleading. A loan portfolio is a stock. It includes loans issued earlier, often at rates that no longer exist. It changes slowly, as loans are repaid or refinanced. New lending, by contrast, reacts much faster to interest rates, risk appetite, and bank standards.

That is why the real impact of expensive money shows up first in new loans, not in the total portfolio.

When the base rate was raised to 16.5 percent in March 2025, lending slowed only briefly. New loans to the economy dipped slightly, from 3.1 trillion to 3.0 trillion tenge. The effect was short-lived. The picture changed after the rate was raised to 18.0 percent in October. In October and November, lending growth slowed more clearly and stayed weak for two months in a row.

On average over the year, 51.6 percent of new loans went to businesses, while 48.4 percent went to households.

From January to November 2025, banks issued about 19.1 trillion tenge in loans to businesses, roughly 1.7 trillion tenge per month. Some months stood out, especially September and October, when lending exceeded 2 trillion tenge. In November, volumes fell.

This pattern reflects seasonality, business contract cycles, and liquidity conditions. But the more important signal lies in where this credit went.

Most business lending is concentrated in Almaty, Astana, and Shymkent, with Almaty far ahead. This is not a statistical quirk. It reflects how business is organized. Many firms operate nationwide but are legally and financially based in major cities. Head offices, treasury functions, and payment flows are all there.

As a result, credit follows management and cash-flow infrastructure, not production geography. This also means that monetary policy transmits faster in large cities, where competition between banks is stronger. Regional markets face tighter limits due to collateral quality, borrower risk, and weaker standardization.

Kazakhstan’s credit cycle is, in practice, urban and agglomeration-driven.

Sector data shows an even clearer pattern:

• ⁠ ⁠Trade accounts for about 44.1 percent of business lending
• ⁠ ⁠Industry follows with 29.6 percent
• ⁠ ⁠Transport, construction, agriculture, and services make up the rest

This tells us something fundamental. Lending in Kazakhstan mainly supports working capital, not long-term investment.

Trade has fast turnover. Loans are used to buy goods, refill inventories, finance receivables, and cover cash gaps. Even with high interest rates, demand for credit remains because speed matters more than price. Credit here is a tool of continuity, not expansion.

This is very different from investment-driven sectors. In industry and construction, high rates hit long-term projects harder. But the effect is gradual. First, fewer long-term loans are issued. Investment decisions are delayed. Financing shifts toward short-term instruments. There is no sudden collapse, just a slow change in structure.

Corporate lending rates do not mechanically track the base rate. They are a mix of funding costs and risk premiums. Banks compete for strong borrowers. Large firms with stable cash flows, collateral, and transparent reporting get better terms.

Many loans also include guarantees, collateral arrangements, or special structures. In some cases, there are quasi-subsidized elements. All this smooths the average rate.

So when average corporate rates react slowly or even fall during tightening, it does not mean monetary policy has failed. It means the composition of borrowers and loans has changed. Risky and long-term borrowers are pushed out. Safer, short-term loans remain. The average shifts because the mix shifts.

On the household side, consumer lending remains large. It supports current demand and smooths incomes, but it does not create new productive capacity. In some conditions, it also adds to inflation inertia.

Mortgages sit in between. They can support construction and related sectors, but if overheated, they push up housing prices and lock households into long-term debt.

So the key question is not how much credit there is, but what it finances and what this means for future growth.

In 2025, Kazakhstan’s credit impulse remained mostly circulation-based, not investment-based. Trade dominates. Credit flows are concentrated in large cities. Money goes where it can return fastest.

This makes sense when rates are high. Short-cycle businesses adapt. Long-cycle projects wait. The impact of tight money appears with a lag – first in credit structure, then in investment, then in productivity and growth.

That is why the loan portfolio can keep growing and still create the illusion that rates do not matter. In reality, the sensitivity is simply pushed into the future.

The debate on lending should not be reduced to “growing or shrinking.” The real issue is what kind of economy credit supports.

If lending mainly fuels trade and consumption, activity can look strong even with expensive money. But long-term growth potential stays limited. This is one reason why international institutions expect Kazakhstan’s growth to slow after 2025, despite the strong 6.5 percent expansion over the past year.

A shift toward longer-term financing in industry, infrastructure, and technology would change this. But that requires predictable policy, better risk tools, and deeper financial institutions.

2025 is a clear signal. The economy can live with high rates, but only within its current structure. Without institutional change and stronger long-term finance, growth will continue to rely on turnover, not on rising productive capacity.