Macroeconomic review - The Times Of Central Asia

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Household debt

Household Debt Persists Despite Lending Slowdown in Kazakhstan

At the start of 2026, Kazakhstan’s financial indicators appear promising: the population is borrowing less, and banks are increasing financing to businesses. Yet behind this macroeconomic optimism lies a more complex picture. The debt burden on citizens has not disappeared; it has simply changed form. While less visible in financial reports, household debt is becoming increasingly evident in everyday family budgets. Two Realities, One Economy Madina Abylkasymova, chair of the Agency for Regulation and Development of the Financial Market, reported to President Kassym-Jomart Tokayev that consumer lending has slowed, while business lending has begun to grow steadily for the first time in three years. Data from the National Bank confirm this trend. In 2024, lending to individuals increased by 23.5%. By the end of 2025, growth had slowed to 17.7%. Business lending, meanwhile, accelerated from 17.9% to 19%. From a macroeconomic perspective, the regulator has met its interim objective: banks are channeling more resources into the productive economy. However, an analysis of second-tier banks’ portfolios suggests that a fundamental imbalance persists. Excluding development institutions and the quasi-public sector, end-of-year data show household debt to commercial banks at $55.1 billion, compared with business debt of 15.4 trillion tenge, or approximately $34.2 billion. The resulting $22.2 billion gap points to a structural issue: individuals remain the primary source of income for major private banks, including Halyk Bank, Kaspi Bank, and Bank CenterCredit (BCC), while the real sector continues to be underfinanced by market-based institutions. Shift to Installment Plans In 2025, under pressure from regulators, banks tightened lending standards for consumer loans. Traditional cash loan issuance slowed significantly. Despite this, total household debt continued to grow. According to the National Bank, the consumer loan portfolio expanded by KZT 2 trillion in the first half of 2025, reaching $55.1 billion by year’s end. This growth was driven not by large loans but by installment plans and Buy Now, Pay Later (BNPL) services. The number of loan contracts is rising much faster than the number of borrowers, a classic sign of demand fragmentation. Instead of a single large loan, citizens are taking out multiple small loans for food, clothing, and everyday necessities. This reflects declining purchasing power. Inflation reached 12.3% by the end of the year, with food prices rising 13.5%. At the same time, official data shows real incomes fell by 2%. Installment plans, once used primarily to purchase durable goods, are increasingly being used to “make ends meet.” Statistically, this appears as a reduction in average loan size and risk exposure. In reality, it points to growing debt dependency among households. Why the Bankruptcy Law Has Fallen Short The 2023 law on restoring personal solvency and bankruptcy was designed to address over-indebtedness structurally. But by early 2026, it was clear the system was functioning unevenly. Data from 2025 reveals the scale of rejections. Of more than 270,000 submitted applications, only about 34,000, just 12%, were approved. Approximately 87% of applicants received official denials. The main reason lies in strict eligibility criteria. For out-of-court...

Macroeconomic review

EDB Forecasts Strong Economic Growth in 2026 for Kazakhstan, Kyrgyzstan, Tajikistan, and Uzbekistan

On December 18, the Eurasian Development Bank (EDB) published its Macroeconomic Outlook for 2026-2028, reviewing recent economic developments and offering projections for its seven member states: Armenia, Belarus, Kazakhstan, Kyrgyzstan, Russia, Tajikistan, and Uzbekistan. According to the report, aggregate GDP growth across the EDB region is forecast to reach 2.3% in 2026. Kyrgyzstan (9.3%), Tajikistan (8.1%), Uzbekistan (6.8%), and Kazakhstan (5.5%) are expected to remain the region’s fastest-growing economies. After two years of rapid expansion, the region’s GDP growth is set to moderate to 1.9% in 2025, down from 4.5% in 2024, mainly due to a slowdown in Russia’s economy. Although lower oil prices are expected to reduce export revenues for energy exporters such as Kazakhstan and Russia, the impact on overall growth will be limited. Meanwhile, net oil importers, including Armenia, Belarus, Kyrgyzstan, Tajikistan, and Uzbekistan, will benefit from improved terms of trade and reduced inflationary pressure. High global gold prices will support foreign exchange earnings for key regional exporters, including Kyrgyzstan, Tajikistan, and Uzbekistan. The report also notes a gradual decline in the U.S. dollar’s share in central bank reserves across the region, though its role in international settlements remains stable. Kazakhstan Kazakhstan’s economy is projected to grow by 5.5% in 2026, supported by the implementation of the National Infrastructure Plan and the state program “Order for Investment,” which are expected to cushion the effects of lower oil prices. Growth in non-commodity exports will also play a stabilizing role. Inflation is forecast to decline to 9.7% by the end of 2026, after peaking early in the year due to a value-added tax (VAT) increase. The average tenge exchange rate is expected to be KZT 535 per U.S. dollar, underpinned by a high base interest rate and rising export revenues. Kyrgyzstan Kyrgyzstan is forecast to lead the region in GDP growth at 9.3% in 2026, driven by higher investment in transport, energy, water infrastructure, and housing construction. Inflation is expected to ease to 8.3%, although further declines will be constrained by higher tariffs and excise taxes. The average exchange rate is projected at KGS 89.2 per U.S. dollar, supported by robust remittance inflows and high global gold prices, gold being the country’s main export commodity. Tajikistan Tajikistan is projected to maintain high GDP growth of 8.1% in 2026, fueled by capacity expansion in the energy and manufacturing sectors, along with rising prices for gold and non-ferrous metals. Inflation is expected to reach 4.5% by year-end. The somoni is expected to remain stable, with an average exchange rate of TJS 9.8 per U.S. dollar, supported by growth in exports and remittances. Uzbekistan Uzbekistan’s economy is forecast to expand by 6.8% in 2026, sustained by strong investment activity and favorable gold prices. Inflation is projected to decline to 6.7%, helped by tight monetary policy and a stable exchange rate. The average soum exchange rate is expected to be UZS 12,800 per U.S. dollar, supported by high remittances and increased metal exports.

Economy

Kazakhstan Tops Central Asia for GDP per Capita, Surpassing Russia and China

Kazakhstan has emerged as the regional leader in gross domestic product (GDP) per capita, overtaking both Russia and China, according to the International Monetary Fund (IMF). IMF data shows that in 2025 Kazakhstan’s GDP per capita reached $14,770, compared to $14,260 in Russia and $13,690 in China. Within Central Asia, Turkmenistan followed with $13,340, while Uzbekistan posted $3,510, Kyrgyzstan $2,750, and Tajikistan $1,430. Kazakhstan also leads among Commonwealth of Independent States (CIS) members, ahead of Georgia ($9,570), Armenia ($8,860), Moldova ($8,260), Belarus ($7,880), Azerbaijan ($7,600), and Ukraine ($6,260). Only the Baltic states recorded higher figures: Estonia ($32,760), Lithuania ($30,840), and Latvia ($24,370). Ireland remained Europe’s leader with $108,920 per capita. The IMF calculates GDP per capita at current prices, offering a snapshot of purchasing power and overall economic wellbeing. Its analysts attribute Kazakhstan’s strong performance to vast mineral resources, with energy and mineral exports continuing to drive growth. Recent years have also seen expansion in raw material processing and production of high value-added goods. The report cites ongoing business reforms, foreign investment inflows, and infrastructure upgrades as key factors enhancing competitiveness. Significant spending is going into transport, logistics, technology, education, healthcare, and social services, bolstering domestic demand and labor productivity. Kazakhstan’s strategic position on trade routes linking Europe and Asia, participation in the Belt and Road Initiative, and active engagement with Russia, China, the EU, and other partners are also seen as growth drivers. The IMF notes that macroeconomic stability is supported by low inflation, a steady tenge exchange rate, and a balanced budget. “The policies of the National Bank and the government are helping to maintain economic stability even amid global challenges,” the report states. The Times of Central Asia previously reported that, according to IMF forecasts, Central Asian economies are expected to grow faster than the global average in 2025.

EDB

EDB Unveils New Forecasting Model for Uzbekistan’s Economy

The Eurasian Development Bank (EDB) has introduced a macroeconomic model designed to enhance the analysis and forecasting of Uzbekistan’s economic trends. Detailed in the working paper “Macroeconomic Model for Analysis and Forecasting of the Uzbekistan Economy,” the tool aims to improve the precision and depth of economic projections. This model integrates into the EDB’s broader economic simulation framework, enabling it to account for the interconnected nature of member economies. It provides a clearer understanding of how Uzbekistan’s economy responds to both global and regional dynamics. With this development, the EDB joins other international institutions engaged in forecasting Uzbekistan’s economic performance. The bank emphasizes that its collaboration with Uzbekistan’s government and development partners ensures the model’s practical application in policy-making. Key functions of the model include evaluating the effects of internal and external shocks on the Uzbek economy, assessing fiscal and monetary policy impacts, and modeling exchange rate dynamics. It also allows for the construction of medium-term development scenarios and the identification of risks to economic stability. Evgeny Vinokurov, Deputy Chairman of the EDB’s Management Board and the bank’s Chief Economist, highlighted the importance of cross-country economic linkages. “This is especially important for developing economies that are closely connected to each other,” he said. The model incorporates variables such as GDP, inflation, the exchange rate of the Uzbek som, interest rates, government expenditures, wage levels, trade volumes, and capital flows, offering researchers a comprehensive view of macroeconomic processes. The bank plans to release its first official forecast for Uzbekistan within a month. Uzbekistan became the seventh member of the EDB in April 2025, following President Shavkat Mirziyoyev’s ratification of the country’s accession to the Agreement Establishing the Eurasian Development Bank. With a 10% equity stake, Uzbekistan is now the bank’s third-largest shareholder.

Economy

Central Asia’s Economic Growth to Reach 5% in 2025

The World Bank’s Global Economic Prospects report offers projections for economic growth, risks, and challenges across Europe and Central Asia (ECA), highlighting mixed outcomes for the region as a whole. Regional Outlook Economic growth across ECA is projected to slow to 2.5% in 2025, with a modest recovery to 2.7% expected in 2026. This deceleration is largely attributed to weaker economic activity in Russia and Turkey, two key regional economies. Excluding these two countries and Ukraine, growth in the rest of the region is forecasted to average 3.3% in 2025-2026. The recovery in these areas will primarily be driven by private consumption and investment, as inflationary pressures ease and monetary policies gradually become less restrictive. Despite these projections, significant risks remain. Global policy uncertainty and potential changes in trade policies could negatively affect trade flows, capital investments, and economic growth. Geopolitical tensions - particularly stemming from Russia’s invasion of Ukraine - and persistent inflation in the region could also pose serious challenges to stability. Central Asia: A Bright Spot Central Asia is expected to outperform the broader ECA region, with growth projected to accelerate to 5% in 2025 before softening to 4.2% in 2026. This growth will be driven by increased oil production in Kazakhstan, which will serve as a critical engine of recovery for the region. Remittances will also continue to play a key role, particularly for Kyrgyzstan and Tajikistan. These inflows provide vital support to household consumption and help improve current account balances. However, international sanctions on Russia and financial restrictions on cross-border transfers could push some remittance flows into informal channels, potentially limiting their economic impact. Long-Term Challenges While short-term recovery appears promising, the ECA region’s long-term growth potential remains subdued. Between 2022 and 2030, annual growth is projected to average just 3.0%, down from 3.6% in the previous decade. Several factors contribute to this slowdown, including labor shortages caused by low workforce participation rates, aging populations, and significant emigration, particularly from the Western Balkans. Education remains a critical area for improvement. Although ECA boasts relatively strong educational systems, issues such as declining quality in higher education and ongoing brain drain have hindered human capital development. Addressing these issues and improving education systems could help the region move closer to high-income economies in the long term. Conclusion While Central Asia’s projected growth for 2025 presents an optimistic outlook, the region - and ECA as a whole - faces significant headwinds. Structural challenges, geopolitical instability, and demographic pressures will require governments to adopt forward-looking policies to sustain growth and promote resilience. As inflation cools and monetary policies ease, targeted investments in education and workforce development could unlock new opportunities for long-term economic stability.

Kyrgyzstan Kazakhstan Eurasian Development Bank (EDB) Macroeconomic review Tajikistan

Robust Economic Growth in EDB Member States

The latest Macroeconomic Review for the EDB’s six member states — Armenia, Belarus, Kazakhstan, Kyrgyzstan, Russia, and Tajikistan – was released by the Eurasian Development Bank on April 12th. Despite the challenging external economic environment, the report illustrates robust economic growth amongst all its members in January-February this year and according to short-term economic activity indicators, high GDP growth is set to continue. Fuelled by capital investment, Kazakhstan’s economy expanded by 4.2%, and Kyrgyzstan experienced a GDP surge of 8.6%, largely due to intensified investment activity, which spiked to 55%. Propelled by a dynamic increase in industrial output, economic activity in Armenia rose by 13.6%, and Belarus’s economy grew by 4% during the same period, boosted by manufacturing and retailing industries. In Russia, industrial production remains the prime driver of economic growth, raising the nation’s GDP by 6.0%, and Tajikistan’s high growth rates are maintained by consumption and investment sectors. In conclusion, the EDB reports that domestic demand within its represented countries is propelled by national projects, including increased public investment in Armenia, import substitution programs in Belarus and Russia, and the development of mechanical engineering in Kazakhstan and energy sectors in Kyrgyzstan and Tajikistan.