The Eurasian Development Bank (EDB) has released the latest Macroeconomic Review for its six member states — Armenia, Belarus, Kazakhstan, Kyrgyzstan, Russia, and Tajikistan.
In the face of a challenging external economic environment, the EDB region saw a strong recovery in 2023, with the aggregate GDP of the six nations increasing by almost 4%. According to EDB analysts, this growth was propelled by internal drivers such as robust consumer and investment demand, as well as effective adjustments in production to accommodate changing operating conditions.
In Central Asia, Kazakhstan’s economy showed particularly robust growth, surpassing 5% by the end of 2023, largely due to government programs aimed at unlocking the country’s investment potential. Investment and trade increased by 13.7% and 11.3% respectively over the year.
Inflation in Kazakhstan continued to decline, with the year-on-year inflation rate dropping from 9.8% in 2023 to 9.5% in January 2024, laying the groundwork for further monetary policy easing.
Kyrgyzstan’s GDP grew by 6.2% in 2023, supported by stronger consumer demand and increased investment activity. Inflation in the country halved to 7.3% year-on-year in 2023, but the National Bank kept its discount rate unchanged at 13% per annum due to persistent pro-inflationary risks. Furthermore, abnormally cold weather in December-January 2022-23 contributed to an increase in production from the energy sector.
However, there are factors that still hinder the pace of growth for businesses in the country. Against a backdrop of persistent, pro-inflationary risks, the National Bank of the Kyrgyz Republic is maintaining its base lending rate at 13 percent per annum to help control price growth.
“We believe that domestic demand will weaken against the backdrop of constraining monetary policy conditions and the projected state budget surplus. According to our estimates, GDP will grow by 4.5 percent in 2024,” EDB analysts report.
For its part, the Ministry of Economy and Commerce of Kyrgyzstan said that the greatest contribution to GDP growth was made by industrial production. According to the department, the economy received an additional boost due to an increase in the output of basic metals. As has been reported previously, Kyrgyz gold miners have exported a record amount of gold in recent years.
In Tajikistan, strong domestic demand and increased exports drove an 8.3% GDP growth in 2023. Inflation declined to 3.8% year-on-year at the end of 2023, close to the lower bound of the National Bank’s target range.
Uzbekistan and Turkmenistan were not included in the report as they aren’t EDB member countries. However, according to local media reports, they also showed strong growth at the end of 2023. The Uzbek economy grew by 6 percent, mainly due to growth in industry and increased agricultural output in agriculture.
Turkmenistan’s GDP in 2023 showed growth of 6.3 percent — mainly due to growth in the economic spheres of trade, industrial production and agriculture. According to international organizations, Turkmenistan’s GDP has almost doubled in the last five years to $82 billion from $46.5 billion. Turkmen authorities are actively investing in the oil & gas sector, which is their main source of export revenue.
