Kyrgyzstan: Economic Outline

Economic Indicators

Landlocked Kyrgyzstan is a low-middle-income country and one of the poorest in Central Asia. Its economy is heavily dependent on gold exports (which generally account for one-tenth of the country's GDP and almost half of the exports), as well as remittances from citizens working abroad, primarily in Russia (equating to more than one-fourth of GDP), which decreased in recent years due to the deterioration of the Russian economy. Following a 9% expansion in 2022, the real GDP is projected to have grown by 6.2% in 2023 (World Bank). The services sector, especially those related to transit trade post-Russia's invasion of Ukraine, has been the primary driver of this growth. On the demand side, increased consumption and exports have contributed to the expansion. The GDP growth is anticipated to decrease to 4.5% in 2024 due to a deceleration in the services sector's growth. In general, the World Bank foresees an annual GDP growth slowdown to 4% in the medium term unless structural reforms are implemented to enhance potential growth.

In 2023, the government maintained a robust fiscal stance. It is estimated that the budget achieved a surplus of 1.2% of GDP, buoyed by rises in both tax and non-tax revenues. Despite this surplus, expenditures saw an increase, particularly in wages, salaries, social benefits, and pensions. The combination of fiscal surplus and economic growth has resulted in a reduced public debt level, standing at 45.5% of GDP by the end of December 2023, down from 46.9% the previous year. The fiscal surplus is projected to shift to a deficit of 1.6% of GDP in 2024 due to reduced tax revenues. This deficit is expected to widen further to 2.4% of GDP by 2026, primarily due to increased capital spending. Consumer price inflation dropped from 13.8% in 2022 to 10.8% in 2023, as global pressures on food and fuel prices eased, and domestic monetary policy stayed restrictive. If the central bank continues to uphold a cautious monetary approach and global food and fuel prices remain steady, inflation is forecasted to decrease to within the target range of 5 to 7% by the conclusion of 2024 and persist at a stable level in the medium term (data World Bank). The country has been trying to attract foreign investment to expand its export base, including the construction of hydroelectric dams, but a difficult business climate and disputes with foreign investors hindered the country’s attractiveness. Kyrgyzstan maintains close relations with China, which has helped the country finance infrastructure projects. The main challenge for policymakers is to strengthen macroeconomic stability, rebuild policy space for future shocks, mobilize financing for development needs, and raise growth potential by advancing reforms (IMF).

Following a notable decrease of 6.2 percentage points to 12.5% in 2021, the poverty rate (measured at USD 3.65/day) experienced a slight increase to 13% in 2022 due to elevated consumer price inflation. However, it is estimated to have declined to 11.2% in 2023 as inflation eased amidst economic growth. Progress in poverty alleviation is further reinforced by enhancements in social assistance, including pension increments, the expansion of cash grants through the "Social Contract" program, and the augmentation of transfers under the "Ui-Bulogo Komok" initiative.  Unemployment was estimated at 4.8% in 2023 by the World Bank, with a GDP per capita of USD 5,988 (PPP).

Monetary Indicators	2016	2017	2018	2019	2020
Kyrgyzstani Som (KGS) - Average Annual Exchange Rate For 1 GBP	94.40	88.63	91.84	87.25	99.16

Source: World Bank - Latest available data.

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Latest Update: May 2024