Economic Growth - The Times Of Central Asia

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Growth Forecasts

Central Asia Economic Growth Expected to Slow in 2027

After several years of rapid expansion, Central Asian economies are expected to lose some momentum. The European Bank for Reconstruction and Development (EBRD) forecasts that regional economic growth will slow from 5.8% in 2026 to 5.3% in 2027. However, growth in manufacturing and construction will not necessarily translate into comparable increases in household incomes. The forecast appears in the EBRD’s September report. The bank’s Central Asia figures also include Mongolia, so the regional growth rate should not be interpreted as an average for the five Central Asian countries alone. The Eurasian Fund for Stabilization and Development (EFSD) has published its own projections for Kazakhstan, Kyrgyzstan, and Tajikistan. They differ somewhat from the EBRD’s forecasts but also anticipate continued economic growth. Kyrgyzstan and Tajikistan Maintain Strong Growth The EBRD expects the economies of Kyrgyzstan and Tajikistan to grow by 7% in 2027, the highest rates projected for the five countries in the region. Kyrgyzstan has experienced a construction boom in recent years, driven by investment in roads, housing, and energy infrastructure. The service sector is also expanding. The country’s economy grew by 11.9% in the first half of 2026. However, rapid growth has been accompanied by rising food and fuel prices. The country's performance is closely tied to economic conditions in Russia, where a significant number of Kyrgyz migrant workers are employed and from which Kyrgyzstan imports the vast majority of its fuel. Changes in the Russian labor market can affect remittances and household spending in Kyrgyzstan. In Tajikistan, growth is supported by investment and exports, particularly precious metals and mineral resources. The economy expanded by 8.2% in the first half of 2026. Tajikistan also relies heavily on imported goods and equipment, with spending on imports exceeding export earnings. Remittances from migrant workers in Russia are an even more important source of household income for Tajiks than for their Kyrgyz neighbors, while rising fuel costs are putting additional pressure on family budgets. Kazakhstan Remains Dependent on Oil Exports For Central Asia’s largest economy, the EBRD forecasts growth of 4.5% in 2027, while the Eurasian Fund for Stabilization and Development expects 5%. In 2026, Kazakhstan’s economy has been constrained by disruptions to oil production and exports. Problems arose at the Tengiz oil field and along the Caspian Pipeline Consortium (CPC) export route, through which a significant share of Kazakhstan’s oil reaches global markets via Russia. Meanwhile, Kazakhstan’s factories increased production. But even growth in industries outside the oil sector has yet to eliminate the country’s dependence on commodity exports. For international buyers, the reliability of supply routes is also important. Disruptions to the CPC can restrict Kazakhstan’s oil exports regardless of demand or global prices. The Times of Central Asia recently examined the challenges facing Kazakhstan’s oil logistics. Inflation is another concern. According to the EFSD, prices in Kazakhstan are expected to rise by approximately 9.5% by the end of 2026. This means economic expansion will not necessarily be accompanied by a noticeable improvement in household purchasing power. Uzbekistan’s Growth Driven by...

Economic Growth

Kazakhstan Economic Growth Hits 4.2% Despite Decline in Oil Production

Kazakhstan’s economy grew by 4.2% in the first nine months of 2026, despite an 8.3% drop in oil production. Growth in construction, manufacturing, transportation, and trade helped offset the decline in the country's main export industry, although real household incomes have barely risen. According to figures presented on October 13 by Deputy Prime Minister and Minister of National Economy Serik Zhumangarin, Kazakhstan produced 69.4 million metric tons of oil between January and September. GDP growth accelerated slightly from 4.1% in the first eight months of the year. Kazakhstan is Central Asia’s largest economy and a significant supplier of oil to the global market. Most of its oil exports pass through Russia, including via the Caspian Pipeline Consortium (CPC) pipeline system to a terminal on the Black Sea. Disruptions along these routes can force producers to cut output. The Times of Central Asia previously examined why even high global oil prices do not always translate into the expected revenues for Kazakhstan. According to government estimates, the non-resource sector expanded by 5.4%. Manufacturing, construction, transportation, and trade accounted for more than three-quarters of GDP growth. Manufacturing output rose by 8.6%, with machinery production increasing by 22.8%. Over the nine-month period, automobile production increased by nearly 30%, while electrical equipment output rose by approximately 21%. Production of fabricated metal products, food, chemicals, and pharmaceuticals also increased. Investment in fixed assets, including buildings and equipment, rose by 7% between January and September, reaching 16.1 trillion tenge (approximately $35.7 billion). Private investment accounted for 85.7% of the total and increased by 18.2%, with particularly strong growth in manufacturing and construction. At the same time, the strengthening of the tenge, Kazakhstan’s national currency, has put pressure on exporters when dollar-denominated earnings are converted into local currency. Consumer lending has also slowed: annual growth in consumer loans fell from 26.4% in August 2025 to 10.4% in August 2026. Annual inflation stood at 9.3% in September, down from 9.8% in August. Prices are still rising, although somewhat more slowly. In the second quarter, real household incomes per person, adjusted for inflation, grew by just 0.7% compared with the same period last year, following an increase of just 0.1% in the first quarter.

Economic Growth

Central Asia Growth Forecasts Remain Strong in Latest ADB Outlook

Four of Central Asia’s five economies are expected to grow faster in 2026 than developing Asia and the Pacific as a whole, according to the Asian Development Bank’s September Asian Development Outlook. ADB forecasts growth of 5% across developing Asia and the Pacific this year, compared with 8.9% in Kyrgyzstan, 7% in Uzbekistan and Tajikistan, and 6.3% in Turkmenistan. Kazakhstan is the exception, with growth forecast at 4.8%. Kyrgyzstan is growing faster than its neighbors but is also facing the highest inflation among the five countries. ADB forecasts inflation at 11.2% this year and 8.5% next year. Growth continues to be supported by domestic demand and sustained investment, while ADB says import dependence and electricity-generation shortfalls are contributing to inflationary pressures. For Uzbekistan, ADB forecasts gross domestic product growth of 7% and inflation of 6.7% in 2026. In 2027, the figures are expected to be 6.8% and 5%, respectively. Stronger-than-expected economic activity prompted ADB to upgrade Uzbekistan’s 2026 growth forecast in its September outlook. Tajikistan is also forecast to grow by 7% in 2026, with inflation at 4.5%. Growth is expected to slow to 6.8% in 2027, while inflation is forecast to edge up to 4.7%. ADB lowered its 2026 growth projection in September, saying the escalation of Russia’s war in Ukraine had disrupted fuel imports and constrained near-term economic activity. Kazakhstan, the region’s largest economy, is growing more slowly than its neighbors. ADB expects growth of 4.8% this year and 4.5% next year, with inflation forecast at 10.4% and 9.5%, respectively. The bank left its growth and inflation forecasts unchanged from its previous outlook, with inflation expected to ease only gradually. For Turkmenistan, ADB forecasts growth of 6.3% in 2026 and 6.2% in 2027, with inflation at 6% in both years. The country’s economic indicators remain more difficult to compare with those of its neighbors because of limited access to reliable and detailed economic data. Its economy also remains heavily dependent on natural gas exports, with China its main gas market. Central Asia’s growth figures look strong against the Asian backdrop, but ADB is warning of energy and climate risks across developing Asia and the Pacific. Prolonged disruption to global energy markets could keep oil and gas prices elevated and volatile. For energy importers, that means higher fuel costs and additional inflationary pressure, while hydrocarbon exporters may benefit from higher prices but remain vulnerable to disruption in production and export routes. Another risk is a very strong El Niño, which ADB expects to persist through the first quarter of 2027. Extreme weather could reduce agricultural production and push up food prices, while a decline in hydropower generation could increase demand for other energy sources. For Kyrgyzstan and Tajikistan, where hydropower supplies most electricity, weather and water availability add another layer of vulnerability. The differences between forecasts for the region remain substantial. In August, The Times of Central Asia compared projections from international financial institutions. The Eurasian Development Bank (EDB) forecast 2026 growth of 10.2% for Kyrgyzstan, 8.3% for Tajikistan,...

Inflation

Kyrgyzstan Inflation Hits 12% as Government Plans Food and Fuel Measures

Kyrgyzstan plans to curb rising prices by importing livestock and grain, subsidizing fuel, and increasing domestic food production. The draft plan for 2026-2027 comes after annual inflation reached 12% in August, alongside double-digit economic growth. The Ministry of Economy and Commerce published details of the draft plan on September 21. In 2027, the government aims to keep inflation within 7.7-8.5%. Without additional measures, the ministry estimates that inflation could reach 8.7-9.5% in 2027 because of global prices, external shocks, and supply disruptions. Annual inflation had already reached 11.5% in July, up from 11% a month earlier, before rising to 12% in August, according to the National Statistical Committee. The medium-term target of the National Bank of the Kyrgyz Republic, the country’s central bank, is 5-7%. Much of the plan focuses on food. The state-owned Kyrgyz Agroholding is expected to import at least 20,000 head of cattle from Kazakhstan, Belarus, and Russia, adding at least 2,700 tons of meat to the domestic market. After prices rose in 2025, the authorities imposed limits on the cost of certain types of meat and temporarily banned livestock exports. The draft calls for the construction of four large poultry complexes and 200 livestock facilities with a combined capacity for 10,000 animals. Kyrgyz Agroholding is expected to open 100 direct-sales outlets for meat and agricultural products. The area planted with corn and oilseed crops would be expanded, while 11 trade and logistics centers would be built to store agricultural produce. The draft also calls for flour mills to import 700,000 tons of wheat from Russia and Kazakhstan. The ministry says the imports are intended to ensure that domestic wheat demand is fully covered. The government is also subsidizing fuel. Kyrgyzstan remains heavily dependent on imported petroleum products, with Russia supplying more than 90% of its imported gasoline, meaning higher import costs quickly feed into transportation, food, and service prices. The state compensates importers for part of the difference between purchase costs and regulated retail prices. The subsidies have been extended through December 31, 2026. In Bishkek and the Chuy region, agreed maximum retail prices are 87.9 soms per liter for AI-92 gasoline, about $1; 99.9 soms for diesel; and 48.8 soms for liquefied petroleum gas. Prices are capped at slightly higher levels elsewhere in the country. Without compensation, AI-92 would cost an estimated 111-118 soms per liter and diesel 125-137 soms. A one-year moratorium on increases in a number of regulated tariffs and payments for the population has also been in effect since July 24. High inflation persists alongside rapid economic growth. First Deputy Chairman of the Cabinet of Ministers Daniyar Amangeldiev said GDP had grown by an average of 10.2% annually over the past four years. GDP per capita increased from $1,230 in 2020 to $3,080 in 2025, while the economy grew by another 11% in the first eight months of 2026. In 2025, 1.779 million people, or 24% of the population, remained below the national poverty line, down from 25.7% a year earlier. On...

Economic Growth

Kazakhstan Ranks 38th in IMD World Competitiveness Ranking

Kazakhstan ranked 38th among 70 economies in the 2026 IMD World Competitiveness Ranking. With an index score of 65.4, Kazakhstan ranked ahead of Spain, Portugal, Poland, India, and Italy. Singapore took first place, followed by Hong Kong and Switzerland. The annual ranking assesses economies across four main areas — economic performance, government efficiency, business efficiency and infrastructure. IMD combines statistical data with a survey of senior executives. Hard data account for two-thirds of the ranking and covered 172 criteria in 2026, while responses from around 6,900 executives were used for another 92 criteria. IMD’s methodology explains that the indicators are designed to measure both quantifiable economic conditions and how businesses view the environment in which they operate. Kazakhstan’s strongest results came in government and business efficiency, where it ranked 23rd globally in both categories. Tax policy was a particular strength, placing ninth among the 70 economies assessed. Kazakhstan’s economy expanded by 6.5% in 2025, the sixth-highest growth rate among the economies assessed by IMD. It also ranked sixth among economies with GDP per capita below $20,000. Kazakhstan is the only Central Asian economy included in the 2026 IMD World Competitiveness Ranking. IMD relies heavily on internationally comparable statistics and business survey data. Reliable data is essential for judging competitiveness. Kazakhstan leads Central Asia in the World Bank’s Statistical Performance Indicators and, alongside Kyrgyzstan, was one of only two regional governments to meet the U.S. State Department’s 2026 minimum fiscal-transparency requirements. Kazakhstan has also subscribed to the International Monetary Fund’s Special Data Dissemination Standard since March 2003. The standard sets requirements for the coverage, periodicity, and timeliness of economic data, as well as public access, integrity and information on methodology.

Foreign direct investment (FDI)

How Almaty and Astana Built Central Asia’s Deepest Business Ecosystem

Every region has cities that pull people and money toward them. New York, London, Dubai, and Singapore became places where ambitious people went to make careers, companies went to find talent, and investors went to put money to work. Once that concentration takes hold, it feeds on itself. More companies create more jobs, more talent attracts more companies, and banks, lawyers, consultants, airlines, schools and restaurants grow around them. Central Asia has developed its own version of that gravitational pull. Almaty has long been the region’s main commercial center and was Kazakhstan’s capital until 1997. It remains effectively tethered to Astana by intense passenger traffic and the constant movement of businesspeople, officials and professionals between the two cities. Astana has grown around government, international finance, technology and diplomacy. Together, they function as a two-city economic and political engine. The numbers explain much of this. The Times of Central Asia’s Central Asia Balance Sheet puts Kazakhstan at $306.2 billion of the five Central Asian economies combined $543.4 billion in GDP, or 56.4%. Its share of accumulated foreign investment is even larger. The Balance Sheet puts Central Asia’s inward foreign direct investment (FDI) stock at $235.6 billion at the end of 2025, of which Kazakhstan held $156.4 billion, or 66.4%. FDI stock represents capital accumulated over years rather than announced agreements or one unusually strong year of inflows. Almaty and Astana Play Different Roles Almaty accounted for 22.7% of Kazakhstan’s GDP in 2025 and Astana another 12.3%, putting their economies at roughly $69 billion and $38 billion respectively. Together they produced around $107 billion. Almaty is Kazakhstan’s main business and financial center. Kazakhstan’s largest banks, investment firms, multinational offices, lawyers, accountants and consultants are concentrated there. The Globalization and World Cities research network (GaWC) placed Almaty in its Gamma+ group in 2024, alongside Austin, Antwerp, and Kuwait City. GaWC bases the classification on the networks of major international business-service firms, offering a measure of how closely a city is connected to the global corporate economy. Consistent with that ranking, multinational companies have also chosen Almaty as a base for regional operations. Mars runs its eleven-country regional headquarters from Almaty, covering all five Central Asian states, the South Caucasus, Belarus, Mongolia, and Turkey. Mastercard describes Almaty as a regional hub and the heart of its consulting operations for the CIS, Central and Eastern Europe. Kazakhstan is unusual in Central Asia in having two major hubs. In functional terms, Astana complements Almaty much as Washington D.C. complements New York: Almaty is the deeper commercial center, while Astana concentrates government, sovereign institutions, diplomacy, and national policy. Astana has also developed regional corporate operations of its own. Alstom runs its Western and Central Asia cluster from the capital, and Mercuria opened a regional office there in 2026 headed by its CEO for Central Asia and the Caspian region. U.S. rail company Wabtec has made Astana a regional locomotive production and engineering base, reinforced by its $4.2 billion agreement as Kazakhstan expands its Middle Corridor links to...