Kyrgyzstan Features - The Times Of Central Asia

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EAEU

From GDP to AI: EAEU Leaders Review Integration Milestones in St. Petersburg

The leaders of the Eurasian Economic Union (EAEU) gathered on December 21 at the Yeltsin Presidential Library in St. Petersburg, Russia, to assess the bloc’s progress and outline future integration priorities. The summit was attended by the leaders of EAEU member states, President of Russia, Vladimir Putin, President of Belarus, Aleksandr Lukashenko, Prime Minister of Armenia, Nikol Pashinyan, President of Kazakhstan, Kassym-Jomart Tokayev, President of Kyrgyzstan, Sadyr Zhaparov, and Chairman of the Board of the Eurasian Economic Commission, Bakytzhan Sagintayev. In an expanded format, representatives of Uzbekistan, Indonesia, Iran, and Cuba also participated. The meeting took place against the backdrop of continued global economic fragmentation, as the EAEU looks to position itself as a stable integration platform within an increasingly multipolar economic order. [caption id="attachment_41254" align="aligncenter" width="2560"] Image: Akorda[/caption] Opening the meeting, Vladimir Putin proposed a year-end review and highlighted key decisions aimed at deepening cooperation. He stated that the EAEU has solidified its position as an independent and self-sufficient center within the evolving multipolar world. Putin pointed to rising combined GDP figures and noted that EAEU membership has contributed to economic stability and improved living standards across member states. These assessments framed the EAEU not only as a regional trade bloc but as a long-term economic center adapting to shifting global alignments. [caption id="attachment_41258" align="aligncenter" width="2560"] Image: Akorda[/caption] Putin also cited progress in building the union’s payment infrastructure, removing trade barriers, and enhancing transport connectivity. Among individual economies, Kyrgyzstan stood out with a GDP growth rate of around 10%. Much of the focus, however, remained on translating macroeconomic gains into deeper market integration across energy, finance, and logistics. Belarusian President Alexander Lukashenko, addressing the summit as chair of the EAEU, called for renewed approaches to economic engagement with third countries over the next five years. He endorsed deeper ties with what he termed the “global majority,” while acknowledging existing challenges, such as delays in establishing unified energy markets and hesitancy among member states to form a common financial market. Nonetheless, he described the Union State of Russia and Belarus as the “locomotive of integration” in the post-Soviet region. The discussion highlighted a recurring tension for the bloc: expanding external partnerships while still completing core internal market harmonization. [caption id="attachment_41259" align="aligncenter" width="2560"] Image: Akorda[/caption] Kazakh President Kassym-Jomart Tokayev emphasized the EAEU's milestone year as it entered its second decade. He projected a 2% increase in the union’s combined GDP in 2025 and noted that intra-union direct investment had surpassed $20 billion. Kazakhstan alone saw a nearly sevenfold increase in EAEU-related investment from $600 million in 2015 to $4 billion in 2024. [caption id="attachment_41260" align="aligncenter" width="2560"] Image: Akorda[/caption] Tokayev also proposed the systematic integration of artificial intelligence technologies into EAEU operations, from trade forecasting to customs duties assessment. He highlighted the union’s potential as a global transport and logistics hub and advocated for the swift implementation of the Caspian Sea shipping agreement. Uzbek President Shavkat Mirziyoyev noted that Uzbekistan’s trade with EAEU countries had nearly doubled to $20 billion over its...

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.

Central Asia + Japan

Japan Steps Out of the Shadows With First Central Asia Leaders’ Summit

On December 19-20, Tokyo will host a landmark summit poised to reshape Eurasian cooperation. For the first time in the 20-year history of the “Central Asia + Japan” format, the dialogue is being elevated to the level of heads of state. For Japan, this represents more than a diplomatic gesture; it signals a shift from what analysts often describe as cautious “silk diplomacy” to a more substantive political and economic partnership with a region increasingly central to global competition over resources and trade routes. The summit will be chaired by Japanese Prime Minister Sanae Takaichi. The leaders of all five Central Asian states, Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan, and Uzbekistan, have confirmed their participation. Alongside the plenary session, bilateral meetings and a parallel business forum are scheduled to take place. Why Now? Established in 2004, the “Central Asia + Japan” format has largely functioned as a platform for foreign ministers and technical cooperation. According to Esbul Sartayev, assistant professor at the Center for Global Risks at Nagasaki University, raising the dialogue to the head-of-state level marks a deliberate step by Japan to abandon its traditionally “secondary” role in a region historically dominated by Russia and China. This shift comes amid a changing geopolitical context: disrupted global supply chains, intensifying competition for critical and rare earth resources, and a growing U.S. and EU presence in Central Asia. In this environment, Tokyo is promoting a coordinated approach to global order “based on the rule of law”, a neutral-sounding phrase with clear geopolitical resonance. Unlike other external actors in Central Asia, Japan has historically emphasized long-term development financing, technology transfer, and institutional capacity-building rather than security alliances or resource extraction. Japanese engagement has focused on infrastructure quality, human capital, and governance standards, allowing Tokyo to position itself as a complementary partner rather than a rival power in the region. Economy, Logistics, and AI The summit agenda encompasses a range of priorities: sustainable development, trade and investment expansion, infrastructure and logistics, and digital technology. Notably, the summit is expected to include a new framework for artificial intelligence cooperation aimed at strengthening economic security and supply chain development. It is also likely to reference expanded infrastructure cooperation, including transport routes linking Central Asia to Europe. As a resource-dependent country, Japan sees Central Asia as part of its evolving “resource and technological realism” strategy. For the Central Asian states, this presents a chance to integrate into new global value chains without being relegated to the role of raw material suppliers. Kazakhstan: Deals Worth Billions The summit coincides with Kazakh President Kassym-Jomart Tokayev’s official visit to Japan from December 18-20. During the visit, more than 40 agreements totaling over $3.7 billion are expected to be signed. These span energy, renewables, digitalization, mining, and transport. Participants include Samruk-Kazyna, KEGOC, Kazatomprom, KTZ, and major Japanese corporations such as Marubeni, Mitsubishi Heavy Industries, Toshiba, and JOGMEC. Japan’s ambassador to Kazakhstan, Yasumasa Iijima, has referred to Kazakhstan as a future Eurasian transport and logistics hub, highlighting its strategic role in developing the Trans-Caspian...

China-Kyrgyzstan-Uzbekistan Railway

Financing Agreement for China-Kyrgyzstan-Uzbekistan Railway Project Signed in Bishkek

On December 16, a loan agreement was signed in Bishkek to finance the construction of the China-Kyrgyzstan-Uzbekistan (CKU) railway, an ambitious regional transport project intended to bolster connectivity across Central and South Asia. According to the Kyrgyz government, the agreement was concluded between China-Kyrgyzstan-Uzbekistan Railway Company LLC, a joint venture formed by the three participating countries and a syndicate of Chinese banks, including the China Development Bank and Eximbank. The CKU railway has been discussed for more than two decades, but repeatedly stalled over financing, route selection, and technical concerns. Momentum increased after 2022 as China sought alternative westbound transport corridors and Central Asian states looked to diversify trade routes and reduce reliance on existing transit pathways. The total cost of the railway project is estimated at $4.7 billion. Half of that amount, approximately $2.3 billion, will be provided as a 35-year loan from China to the joint project company, which will be responsible for repayment. The remaining $2.3 billion will be contributed to the company’s authorized capital: China will cover 51%, while Kyrgyzstan and Uzbekistan will each provide 24.5%. The CKU railway is a strategically significant infrastructure initiative spanning 523 kilometers. Construction officially began on December 27, 2024, in Kyrgyzstan’s Jalal-Abad region. Once completed, the railway will link Kashgar in China with Torugart, Makmal, and Jalal-Abad in Kyrgyzstan, and continue on to Andijan in Uzbekistan. A cargo transshipment station and logistics hub are planned in Makmal. The railway is expected to handle up to 15 million tons of cargo annually. Despite its strategic appeal, the project has raised concerns about debt exposure, particularly for Kyrgyzstan, which already relies heavily on Chinese financing. Officials say the joint-venture structure and long loan maturity will limit fiscal risks, though critics argue projected cargo volumes will need to be met for the railway to be financially sustainable. Currently, neither Kyrgyzstan nor Uzbekistan has a direct rail link with China; the only such connection in Central Asia runs through Kazakhstan. For Uzbekistan, the railway is expected to shorten transit times to Chinese markets and expand export capacity for industrial and agricultural goods. Officials in Tashkent have argued that the CKU route could reduce delivery times by several days compared with existing rail corridors. The CKU railway is among the most technically complex projects in the region. It includes the construction of 50 bridges and 29 tunnels, totaling 120 kilometers in length, meaning roughly 40% of the route will consist of bridges and tunnels. The Kyrgyz section alone will cover 304 kilometers. On December 5, Chairman of the Kyrgyz Cabinet of Ministers Adylbek Kasymaliev visited the construction site of one of the tunnels in the Jalal-Abad region to inspect progress. According to government sources, work has begun on 18 of the 29 planned tunnels and 17 of the 50 bridges. The project currently involves 5,695 pieces of machinery and over 5,000 workers. For Kyrgyzstan, the CKU railway represents the largest infrastructure project in the country’s history. Authorities view the project as a chance to transform...

Digital Development

The Digital Future of Central Asia: Who Is Shaping It, and How?

Digital security is now a key component of most processes in every country. A large share of organizations is moving, or has already moved, their processes online, which requires increased attention and control. Many Central Asian countries are already rolling out AI technologies at the state level. Financial institutions, social systems, crypto services, rental services, and other high-risk areas can no longer develop effectively without biometric identification and AI. Central Asia is gradually developing its own biometric landscape, and if we look at it not as a set of disparate projects but as an emerging infrastructure, it becomes clear that the countries are moving at very different speeds. Kazakhstan: Leader in Biometrics and Digital Identity in the Region Today, Kazakhstan is the undisputed leader in Central Asia in the field of biometric technologies. In this region biometrics has long gone beyond isolated pilots and has become part of the digital infrastructure on which a significant part of the economy operates. Unlike neighboring countries, where biometrics is most often limited to video surveillance or exclusively state initiatives, Kazakhstan has developed a mature market of independent developers and technology companies creating competitive products both for private organizations and for government platforms. Thanks to active digitalization, biometrics in the country has become not an add-on, but the primary mechanism for identity verification. The state additionally stimulates this process: it expands the use of biometric identification in ministerial processes, strengthens the requirements for remote verification, and transfers critical services, such as the issuance of an Electronic Digital Signature (EDS), to biometric authentication. In this way, an environment is being built in which online processes gain full legal validity and the population receives convenient access to services without the need to visit physical offices. Kazakhstan’s key distinction is that it has a full-fledged biometrics market, not just government-driven initiatives. The private sector actively invests in biometric solutions, integrates them into its processes, and competes on the quality of the user experience. Banks strive to reduce entry barriers for clients, MFIs (software development kits) increase protection against fraud, crypto exchanges strengthen their compliance structure, and marketplaces implement biometric identification to secure transactions. This has created an effect unique for the region: biometrics has ceased to be a one-off project and has turned into an everyday part of business. Against this background, independent local companies are developing that are capable of creating advanced technological solutions within the country. Among them, Biometric.Vision stands out in particular, an international company originating from Kazakhstan, one of the key players in the Kazakhstani market that has formed its own technological stack and operates across several industries. The company has become a technological partner for banks, financial organizations, government services, and regulated industries, providing software modules for remote identification, biometric verification, liveness checks, and fraud prevention. Local products make it possible to respond quickly to new regulatory requirements, adapt to them, and address the real needs of local businesses. For Kazakhstan, the presence of local players in the biometrics market is...

B5+1

Bishkek to Host Second B5+1 Forum of Central Asia and the U.S.

Kyrgyzstan is preparing to host the second B5+1 Forum of Central Asia and the United States, scheduled for February 4-5, 2026, in Bishkek. On December 12, Kyrgyzstan’s Ministry of Foreign Affairs and Ministry of Economy and Commerce held a joint briefing for ambassadors from Central Asian countries and the United States to outline preparations for the event. The B5+1 platform serves as the business counterpart to the C5+1 diplomatic initiative, which unites the five countries of Central Asia – Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan, and Uzbekistan – with the United States. Launched by the Center for International Private Enterprise (CIPE) under its Improving the Business Environment in Central Asia (IBECA) program, B5+1 is supported by the U.S. Department of State and aims to foster high-level engagement between business leaders and policymakers. The upcoming forum in Bishkek builds on the outcomes of the C5+1 Summit held in Washington on November 6 this year. Its objective is to deepen U.S.-Central Asia economic cooperation and highlight the private sector’s pivotal role in advancing economic reform across the region. The event is co-hosted by CIPE and the Kyrgyz government. According to organizers, the forum’s agenda will focus on key sectors including agriculture, e-commerce, information technology, transport and logistics, tourism, banking, and critical minerals. These thematic areas reflect emerging regional priorities and shared interests in enhancing sustainable growth and economic resilience. The B5+1 Forum aims to create a platform for sustained dialogue between governments and private sector actors, encouraging the development of long-term partnerships and policy coordination. The inaugural B5+1 Forum was held in Almaty in March 2024, and brought together over 250 stakeholders from all five Central Asian countries and the United States. The first event centered on regional cooperation and connectivity, with a strong emphasis on empowering the private sector to support the objectives of the C5+1 Economic and Energy Corridors.