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A growing debate is underway in Kazakhstan regarding the disconnect between the nation's Gross Domestic Product (GDP) growth and the actual improvement in the well-being of its citizens. Economist Ruslan Sultanov sheds light on the underlying causes and potential solutions to this complex economic reality.

Shifting Consumption Patterns

While both GDP and real incomes have seen an increase over the past decade, the rising cost of living has offset these gains for many families. This is particularly evident in the widening gap between average and median incomes, with average figures climbing faster than what most individuals earn.

The changing structure of household spending further illustrates this trend. In 2015, food accounted for 44.7% of household expenditures. Projections for 2025 indicate this figure will rise to 52.3%. This means a larger portion of family budgets is being allocated to essential needs, leaving less room for savings, education, healthcare, and investments.

This pattern is observable even in major cities like Almaty, where spending on food has increased from 42.2% to 51.9%. This suggests that the cost of living is outpacing financial capabilities even in economic hubs that should theoretically benefit first from growth.

Evolving Income Structure

The composition of household income is also undergoing a transformation. Between 2015 and 2025, the share of labor income is projected to decrease from 80.1% to 74.9%. Conversely, the share of social transfers is expected to increase from 16.6% to 21.2%. This indicates a growing reliance on state-provided redistribution mechanisms rather than robust market-driven income sources.

The New Face of Inflation

Inflation in Kazakhstan is not merely about rising prices; it signifies a shrinking space for normal living. Increases in the cost of food, utilities, transportation, and other essential goods and services diminish not only people's money but also their opportunities. Therefore, combating inflation is crucial not only for the National Bank and the government but also as a vital factor in maintaining the stability of the middle class.

New Challenges for the State and Citizens

This economic landscape presents new challenges for the government. Relying solely on social payments and price controls is insufficient. The primary driver of sustainable income growth is labor productivity. Kazakhstan needs to foster competition, attract investment, and enhance its business environment and human capital.

Simultaneously, citizens must improve their financial literacy, learn to manage expenses effectively, and actively seek additional sources of income. Countries that adapt to new economic conditions tend to navigate these periods more smoothly. Crucially, maintaining societal confidence in the future is paramount.