InfoHub Logo

Kazakhstan is facing a potential economic slowdown in its trade and logistics sectors as citizens increasingly shy away from taking out loans. This trend is directly linked to the high interest rates currently in place, according to Serik Zhumangarin, Deputy Prime Minister and Minister of National Economy.

High Interest Rates Dampen Lending

Zhumangarin explained that the elevated interest rates on loans in Kazakhstan are a consequence of the National Bank's base rate. The regulator's actions are intentionally designed to cool down the credit market.

"Regarding lending to businesses, you know that the interest rate in our country is very high. This is linked to the National Bank's base rate. Of course, this is a deliberate measure by the National Bank to narrow the lending sector," Zhumangarin stated.

He also highlighted the impact of prudential requirements imposed by the regulator. Previously, consumer lending saw robust growth, but this has now significantly decelerated. In the first quarter of the year, consumer lending growth stood at just 1.2%, a stark contrast to previous years where it exceeded 20%.

Consumer Demand Slowdown Impacts Businesses

The Deputy Prime Minister emphasized the direct correlation between consumer lending and overall demand. When people borrow and spend less, it inevitably affects businesses, particularly those in the trade and service sectors.

"Consumer lending is narrowing. And what is consumer lending? It is an increase in demand. Demand is narrowing. And demand directly affects small and medium-sized businesses operating mainly in the service and trade sectors," the minister elaborated.

Zhumangarin cautioned that if this trend persists, businesses in these sectors will feel the amplified effects of a cooling market. The impact may extend beyond direct business operations, affecting related industries that previously benefited from increased consumer spending, such as logistics and retail, which saw development during the consumer lending boom.

Therefore, Zhumangarin attributes some of the challenges faced by small and medium-sized businesses not only to tax reforms but also to a general cooling of consumer demand stemming from reduced lending activity.