Economy - The Times Of Central Asia

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Business Registration

Registered Businesses in Kazakhstan Rise More Than 20% Despite Tax Reform

The number of registered businesses in Kazakhstan increased by more than 20% during the first half of 2026, according to government data, easing earlier concerns that the country’s new Tax Code would trigger widespread business closures. The growth came despite higher value-added tax (VAT) rates and tighter registration requirements introduced this year. During a government meeting, Deputy Prime Minister and Minister of National Economy Serik Zhumangarin said the number of registered business entities had reached 2.939 million by the end of June, up by nearly 499,000, or 20.4%, from the beginning of the year. The strongest increase came from individual entrepreneurs and self-employed workers. Their combined number rose from 1.86 million to 2.352 million over six months, while the number of self-employed workers reached 688,597. The expansion also coincided with improved fiscal performance. Government revenues increased by almost 16% during the reporting period, while VAT receipts were nearly 1.5 times as high as a year earlier, according to official figures. Growth was also recorded among corporate businesses. The number of registered legal entities increased from 579,756 to 587,117 during the first half of the year, while the number of VAT payers rose from 135,845 to 158,194. The figures indicate that businesses have largely adapted to the new tax environment despite concerns voiced before the reforms took effect. Earlier this year, analysts warned that higher taxes and stricter registration rules could force many small businesses to close, but the first six months of data have not supported those expectations. The structure of Kazakhstan’s small and medium-sized business sector also remained largely unchanged. More than 60% of all SMEs continue to operate in trade and agriculture, as well as other services. These remain the country’s largest entrepreneurial sectors. Growth varied across industries, reflecting differences in business activity. Among small legal entities, the mining sector recorded the fastest increase at 2.9%. Construction and agriculture both grew by 2.5%, while information and communications expanded by 2.4%. The figures indicate continued investment in traditional industries and digital services. Among medium-sized enterprises, real estate posted the strongest growth at 5.8%, nearly double the pace of the next-fastest sector. Finance and insurance grew by 3.2%, while other service industries expanded by 3.1%, reflecting continued demand in domestically oriented sectors. The figures also point to the growing role of small and medium-sized businesses in Kazakhstan’s economy. SMEs accounted for 40.9% of gross domestic product in 2025, up from 33.5% in 2021, according to official data. The sector has become an increasingly important source of investment and regional development, while contributing to economic diversification. Employment data reflect the same trend. During the first quarter of 2026, Kazakhstan had 9.4 million employed people, including 4.5 million working in small and medium-sized businesses. This means that nearly one in two employed people now works in the SME sector. The first-half data indicate that Kazakhstan’s business sector continued to expand despite a more demanding tax environment. While it remains too early to assess the long-term impact of the tax reform, the increase...

Transit Trade

Pakistan and Uzbekistan Turn to China for Transit Trade Amid Regional Security Risks

Pakistan and Uzbekistan have agreed in principle to reroute some of their bilateral transit trade through China. The move follows worsening security that closed traditional routes through Afghanistan and disrupted alternatives through Iran, according to Pakistan Today. The two governments are expected to formalize the decision by signing amendments to the Pakistan-Uzbekistan Transit Trade Agreement during the visit of Uzbekistan’s deputy prime minister to Pakistan on July 21. Under the revised agreement, the China corridor will become an official transit route, allowing cargo to travel through Pakistan’s Sost Dry Port, cross western China, and continue into Central Asia. “The protocol is aimed at expanding transit options and ensuring uninterrupted movement of goods between the two countries despite evolving regional security challenges,” a Pakistani official familiar with the negotiations told Pakistan Today on condition of anonymity. The arrangement will provide Pakistan with an additional route to Central Asian markets while allowing Uzbekistan to maintain access to Pakistani seaports despite growing instability across the region. The decision marks a significant shift in regional trade planning. For years, the shortest and most commercially attractive route between Pakistan and Uzbekistan passed through Afghanistan. That corridor was also expected to become part of the planned Uzbekistan-Afghanistan-Pakistan railway linking Central Asia with ports on the Arabian Sea. Those plans have largely stalled following the sharp deterioration in relations between Islamabad and Kabul. Pakistan closed its main border crossings, including Torkham and Chaman, after cross-border clashes in October 2025. Trade through the crossings has remained suspended amid continuing security tensions and disagreements over militant groups operating from Afghan territory. The disruption has affected not only transit cargo but also Pakistan’s direct exports to Afghanistan, traditionally an important market because of its limited domestic manufacturing base. Pakistani companies supply cooking oil, cement, soap, pharmaceuticals, aluminum cans, food products, and other consumer and construction goods to Afghanistan. Business groups cited by Pakistan Today estimated earlier this year that the prolonged border closure was costing Pakistani exporters around $177 million every month, while warning that customers in Afghanistan and Central Asia could permanently shift to suppliers using other regional transport routes. Pakistan initially sought to compensate by expanding transport links through Iran. In April, Islamabad operationalized new transit corridors through both Iran and China, including an Iranian route connecting Pakistani ports with Central Asian markets while bypassing Afghanistan. However, renewed military confrontation between Iran and the United States has raised fresh concerns about that option. Continuing attacks on infrastructure and commercial shipping around the Strait of Hormuz have increased freight costs, insurance premiums, and energy-related risks, reducing the corridor’s reliability. Routing trade through China would allow both countries to bypass security problems affecting routes through Afghanistan and Iran. It would also advance Pakistan’s long-term plan to extend the China-Pakistan Economic Corridor toward Central Asia. The new route, however, is expected to come with trade-offs. Transporting goods through China will involve longer distances, additional border procedures, higher handling costs, and extended transit times. As a result, the corridor is expected to...

Foreign Workers

Kazakhstan Plans New Measures to Attract Highly Skilled Foreign Workers

Kazakhstan is preparing to introduce new mechanisms to attract highly qualified foreign specialists as part of a broader effort to increase the country’s openness to talent, investors, and entrepreneurs. The Ministry of Labor and Social Protection has drafted amendments to the country’s migration legislation following a presidential decree aimed at modernizing migration policy and addressing labor shortages. The proposed legislation introduces a targeted recruitment system for in-demand foreign specialists based on the current needs of the domestic labor market. A key element of the reform is the creation of a government-approved list of priority professions. The list is expected to include specialists in information technology, healthcare, education, and culture, sectors currently experiencing some of the most acute labor shortages. The draft law also establishes clearer and more transparent procedures for hiring foreign professionals at the request of employers. Authorities are placing particular emphasis on improving conditions for foreign specialists working and living in Kazakhstan, including through an expansion of the Altyn (Golden) Visa program. Under the proposed changes, foreign specialists would be eligible to apply for resident status after a specified period of employment in Kazakhstan. The status would provide access to tax incentives, financial services, healthcare and education opportunities, as well as the right to work outside the country’s foreign labor quota system. Officials say the reforms are intended not only to address labor shortages, but also to facilitate the transfer of skills and expertise to local workers and accelerate technological modernization. In the longer term, the government hopes the measures will help position Kazakhstan as a regional hub for skilled professionals and advanced technologies. The Labor Ministry is also working to significantly expand the list of in-demand professions from 51 to 174 specialisms. The expanded list would include occupations in the nuclear industry, energy, biotechnology, genomic medicine, water management, irrigation, and healthcare. Authorities say the initiative is designed to strengthen Kazakhstan’s competitiveness in the global race for talent and support the development of strategically important sectors of the economy. The Times of Central Asia previously reported that Kazakhstan had approved its 2026 quota for foreign labor at 0.25% of the country’s total workforce. The quota includes permits for 726 senior executives and deputies, 3,402 heads of structural divisions, 5,893 specialists, and 3,131 skilled workers. An additional 4,994 permits were allocated for seasonal labor.

Economy

Kazakhstan Freezes Projects with Iran Amid Military Conflict

Kazakhstan has suspended several joint projects with Iran amid ongoing military hostilities in the country, Deputy Foreign Minister Arman Issetov has announced. The decision effectively puts on hold plans to expand trade and economic cooperation between Astana and Tehran, despite previously stated ambitions to significantly increase bilateral trade. On December 11, 2025, during the Kazakhstan-Iran business forum in Astana, Tokayev said bilateral trade had exceeded $340 million the previous year. The two sides set an initial goal of raising trade to $1 billion, with a longer-term aim of doubling that figure. However, the escalation of military activity in Iran has forced both sides to reconsider these plans. “The situation is currently very complicated. At this point, many of our projects with Iran have been frozen due to the country being in a state of war. As a result, our businesses and entrepreneurs are now in a wait-and-see position,” Issetov said. “Kazakhstan is not suffering major losses, as the volumes were relatively small and did not significantly impact the national economy. Nevertheless, given our strong partnership with Iran, there is an effect, though not a substantial one,” he added. Despite the growth in trade, Iran’s share in Kazakhstan’s foreign economic relations remains limited. According to the Ministry of National Economy, exports to Iran in 2025 amounted to $239.3 million, while imports totaled $191 million, equivalent to roughly 0.3% of the country’s total foreign trade turnover. The agricultural sector accounted for the bulk of trade: approximately 90% of Kazakhstan’s exports to Iran consisted of wheat and barley. In the first ten months of last year alone, grain shipments reached $280 million, exceeding the total agricultural trade volume for 2024 ($220 million). Government officials believe these volumes can be redirected to alternative markets if necessary. From a logistics perspective, Iran is not considered a critical transit route for Kazakhstan. This was previously confirmed by Deputy Prime Minister and Minister of National Economy Serik Zhumangarin. “I don’t think the conflict will have any impact on our logistics. Shipments through the Persian Gulf were never dominant for us,” he said. Despite its currently limited role, Iran had been viewed as a promising direction for the development of transport corridors. In December 2025, Tokayev announced plans to build a transport and logistics terminal at Shahid Rajaee Port, which was intended to provide direct access for Kazakh exports to global markets. Plans also included strengthening links between Kazakhstan’s ports of Aktau and Kuryk and Iran’s ports of Amirabad and Anzali, as well as integrating Bandar Abbas and Chabahar into regional logistics chains. “It is important for us to develop multimodal corridors connecting Central Asia with the Persian Gulf, and the Kazakhstan-Turkmenistan-Iran railway plays a key role in this,” Tokayev previously stated. According to his estimates, cargo traffic along this route could have doubled by 2030. For now, those plans are effectively on hold. - Explore our complete Gulf crisis timeline, bringing together every major development and its implications for Central Asia in chronological order.

Access to Clean Water

Water Stress: Will the Summer of 2026 Become a Turning Point for Central Asia?

The summer of 2026 is projected to be a critical and potentially decisive period for Central Asia in the context of water stress. The region is entering the growing season with significantly lower water reserves in its main river basins, the Amu Darya and Syr Darya, compared to previous years. The combined impact of climate change and rising consumption is expected to exacerbate irrigation shortages, threatening crop yields and food security. A Region Under Pressure: Water as a Strategic Factor For Kazakhstan, water is taking on an increasing strategic importance in 2026. The southern regions, Kyzylorda, Turkestan, and Zhambyl, have already entered a phase of persistent low water availability. Estimates suggest that the irrigation deficit could reach up to 1 billion cubic meters. The situation in the Syr Darya basin remains critical. Inflows are expected to fall 3.2 billion cubic meters below normal, and by the start of the growing season, total water volume may reach only 1-2 billion cubic meters, far below demand. The Shardara Reservoir, a key regional storage facility, is currently at roughly half of its design capacity. Uzbekistan faces an even more vulnerable position due to its high population density and large agricultural sector. The flow of the Amu Darya is projected to fall to 65% of its historical norm, putting food stability at risk. Tashkent is accelerating investments in canal reconstruction, as water losses during transport reach up to 40%. Against this backdrop, tensions between upstream and downstream countries could become more pronounced. Kyrgyzstan, acting as the region’s “water tower,” faces a difficult trade-off between energy security and its obligations to downstream neighbors. Low accumulation levels in the Toktogul Reservoir have constrained hydropower generation, leading to winter energy shortages and reduced summer water releases, precisely when Kazakhstan and Uzbekistan require them for irrigation. This cyclical dependency turns each growing season into a complex round of “water-for-electricity” negotiations, with diminishing room for maneuver. Tajikistan faces a similar situation in the Amu Darya basin. The Nurek Hydropower Plant is operating under strict conservation principles as reservoir levels remain several meters below previous norms. For Dushanbe, the priority remains fulfilling the Rogun project, which, under low-water conditions, raises justified concerns among downstream states. These tensions are compounded by the accelerated melting of Pamir glaciers, which currently increases water flows but poses a long-term risk of severe depletion. Turkmenistan is also expected to experience acute water stress in 2026. In the Ahal and Mary regions, pasture degradation and limited irrigation are reducing livestock numbers and grain yields. The government is investing in dredging the Karakum Canal and constructing small desalination plants, but these measures only partially offset declining Amu Darya flows. An additional destabilizing factor is Afghanistan’s Qosh-Tepa Canal project. By summer 2026, its impact on the Amu Darya basin is expected to become physically noticeable. Estimates state that unregulated water withdrawals could reduce downstream flows by 15-25%. Afghanistan’s absence from regional water-sharing agreements creates a legal vacuum that existing mechanisms cannot address. As a result, Central Asia is...

Economy

Uzbekistan’s Economy to Remain Strong in 2026, IMF Forecasts 6.8% Growth

The International Monetary Fund (IMF) has released its latest assessment of Uzbekistan’s economy, reporting strong growth in 2025 alongside recommendations for continued fiscal discipline and structural reforms. According to the IMF, Uzbekistan’s real GDP grew by 7.7% in 2025, driven by robust domestic consumption and investment. Growth was broad-based, with the services and construction sectors expanding the fastest. At the same time, the unemployment rate declined to 4.8%, down 0.7 percentage points from the previous year. Inflation showed a downward trend, with annual consumer price growth falling to 7.3% by the end of 2025, compared to 9.8% a year earlier. The IMF attributed this to the fading impact of energy price increases introduced in May 2024, a stronger national currency, and what it described as an “appropriately tight monetary policy stance.” Core inflation also declined over the same period. External balances improved. The current account deficit narrowed to 3.9% of GDP, supported by strong exports and remittance inflows. International reserves remained stable, covering around 13 months of imports, while the fiscal deficit fell to 2.1% of GDP, below the government’s 3% target. “The economic outlook remains favorable,” the IMF said, while pointing to increasing global uncertainties, particularly linked to geopolitical tensions and the conflict in the Middle East. Economic growth is projected at 6.8% in 2026, before moderating to around 6% in 2027. Inflation is expected to remain above the Central Bank’s 5% target in 2026, partly due to higher global oil prices, before easing toward the target level in 2027. The IMF stressed that monetary policy should remain focused on price stability, noting that the policy rate has been held at 14% since March 2025. The report also highlighted risks related to global economic conditions, including trade disruptions and commodity price volatility, as well as domestic challenges such as potential pressure for increased public spending and vulnerabilities linked to state-owned enterprises. The IMF recommended limiting additional government spending in 2026 to avoid fuelling inflation. It also called for targeted social support measures instead of broad subsidies, alongside continued reforms in tax policy, public financial management, and state-owned enterprises. Further recommendations included accelerating the privatisation of state-owned banks, strengthening financial sector oversight, and improving governance standards. The IMF also emphasised the importance of maintaining exchange rate flexibility to help the economy absorb external shocks. The findings build on last year’s IMF assessment, which reported 7.6% growth in the first nine months of 2025, also driven by strong consumption and investment, while inflation showed signs of easing.