Economic Growth - The Times Of Central Asia

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Poverty

Kazakhstan Poverty Reduction Stalls Despite Economic Growth

Kazakhstan has made little progress in reducing poverty in recent years despite continued economic growth, according to the World Bank’s October 2026 Poverty & Equity Brief. The Bureau of National Statistics puts the national poverty rate at 5% in 2025, unchanged from 2024. The World Bank’s brief gives a slightly lower figure of 4.9%, equivalent to approximately 1.02 million people living below the national poverty line. The national rate fell from 18.2% in 2006 to 2.9% in 2013. However, a 2018 change to the calculation of the subsistence minimum, which defines the national poverty line, limits direct comparisons with earlier figures. Much of Kazakhstan’s earlier success in reducing poverty was driven by higher earnings from employment. In 2025, however, gross domestic product per person grew by 5.2%, while wages fell by 1.4% and incomes by 2.3% after adjusting for inflation, according to the brief. The bank’s 2024 assessment linked slower poverty reduction to weaker economic growth and sluggish productivity gains. Kazakhstan’s economy remains heavily dependent on commodity exports, leaving household incomes vulnerable to economic shocks. The bank also uses a separate international poverty threshold of $8.30 per person per day for upper-middle-income countries, expressed in 2021 purchasing power terms to account for price differences between countries. Under this measure, 13.8% of Kazakhstan’s population was living in poverty in 2024. That represents a substantial improvement from 55.7% in 2006, although the share remained at roughly 14% between 2022 and 2024. Inflation has added to the pressure on household budgets, particularly among poorer families, which spend a larger proportion of their income on essentials. Although annual inflation has eased, prices continue to rise. The statistics bureau reported inflation of 9.2% in October 2026, with food prices 7.6% higher than a year earlier. The brief also highlights inequalities obscured by national averages. Citing estimates from the World Inequality Database, it notes that Kazakhstan’s highest-income 1% of adults received 14.9% of total income in 2024, almost as much as the 16.4% received by the lowest-income half. The bank’s projections put poverty under its international measure at 11.2% in 2025, 9.9% in 2026, and 8.7% in 2027. These projections are based on growth in economic output per person and remain highly uncertain pending household survey data, the bank warns.

Economic Transparency

Turkmenistan Meets IMF After Report on Missing Data

Turkmen officials and a representative from the International Monetary Fund met in Ashgabat, weeks after the IMF concluded that Turkmenistan breached its obligations as a member country by not providing key data. Turkmenistan’s Ministry of Foreign Affairs did not mention the IMF's September finding in a statement about the meeting on October 28, saying that the two sides discussed “prospects” for further cooperation. It said the lead participants in the meeting were Ahmet Gurbanov, deputy foreign minister, and Anna Bordon, head of the IMF’s mission for Azerbaijan and Turkmenistan. “The sides emphasized the importance of cooperation with international financial institutions in the context of strengthening macroeconomic stability, improving economic mechanisms and exploring modern approaches to addressing current economic challenges,” the Turkmen ministry said. On September 11, the IMF Executive Board said Turkmenistan had breached its obligations as a member country by failing to provide data “necessary for the IMF’s activities.” The board said “Turkmenistan has not provided key required data, including information on international reserve assets, official holdings of gold and foreign exchange, and a complete balance of payments.” It said the failure to provide the data “could not be explained by a lack of capacity” and that the board would meet within six months to review Turkmenistan’s progress in rectifying the situation. The Washington-based IMF requires its 191 member countries to provide such data for economic surveillance, policy analysis, and the assessment of potential vulnerabilities. Turkmenistan, which is estimated to have the world’s fourth-largest proven reserves of natural gas, does not have a loan program with the IMF. However, IMF technical experts have assisted the Ministry of Finance in areas including budgeting. The IMF said in June that it projected economic growth in Turkmenistan to moderate to about 2.4 percent this year, “reflecting capacity constraints in the hydrocarbon sector and persistent structural inefficiencies associated with the large state footprint in the economy.” Turkmenistan has sought to expand tourism and increase diplomatic and economic contacts. But it remains a highly controlled state, and it can be difficult for outsiders to obtain economic and other information about the country.

interest rates

National Bank of Kazakhstan Cuts Base Rate to 15.75%

The National Bank of Kazakhstan cut its base interest rate from 16.25% to 15.75% on October 23, marking its fourth consecutive reduction since June 2026. The central bank has indicated that it may keep the rate unchanged through the end of the year, despite a continued slowdown in inflation.Annual inflation declined to 9.3% in September from 9.8% in August, while households’ inflation expectations fell from 12.1% to 11.8%. According to the National Bank, a stronger tenge and relatively tight monetary policy helped slow price increases. Food inflation declined to 8.5%, while non-food inflation fell to 11%. The base rate had remained at 18% since October 2025. It was lowered to 17% in June 2026, 16.75% in July, and 16.25% in September. The cuts have lowered the base rate by 2.25 percentage points. The base rate influences bank lending costs and deposit yields. Lowering it creates conditions for a gradual reduction in borrowing costs for businesses and households, although commercial banks set their own interest rates based on borrowers’ credit risks and funding costs. Nevertheless, borrowing costs remain high, reflecting the challenges facing Kazakhstan’s economy. Inflation is still almost twice the central bank’s 5% target, meaning prices continue to rise rapidly, even as the pace of increase slows. Meanwhile, strong economic growth has brought limited relief to households: official figures show that real per capita incomes increased by just 0.7% year-on-year in the second quarter. National Bank Governor Timur Suleimenov said that further rate cuts will require a more sustained slowdown in inflation. The central bank identifies rising global energy and food prices, high government spending, and potential increases in regulated utility tariffs among the main risks. Annual inflation could rise slightly toward the end of the year because current prices will be compared with those recorded when Kazakhstan restricted utility tariff increases, from October 2025 to March 2026. However, the National Bank intends to focus primarily on how tariff changes affect other prices rather than responding to the tariff increases themselves. Kazakhstan’s gross domestic product grew by 4.2% in January–September 2026, driven mainly by construction, manufacturing, and transportation. Fixed capital investment increased by 7%, while investment in the non-resource sector, excluding budget funds, rose by 25%. Strong investment activity supports domestic demand while also complicating efforts to bring inflation under control. The National Bank aims to reduce inflation to 6.5–8.5% in 2027 and reach its 5% target in 2028. The next base rate decision is scheduled for December 4.

Economic Growth

Kyrgyzstan Economic Growth: Government Targets 8% Annually

Kyrgyzstan has set a target of average annual real GDP growth of at least 8% and a 20% annual increase in foreign direct investment inflows through the end of 2030. Bishkek aims to achieve these goals by developing export-oriented industries, expanding transport routes, and attracting international capital. While recent international forecasts suggest growth could exceed 8% this year, sustaining that pace through 2030 remains a challenge. The government outlined the priorities at a meeting in Bishkek on October 21. Its plans include expanding production of export goods, modernizing trade and customs procedures, strengthening private property protections, and improving businesses' access to long-term financing. Positive Momentum Set to Continue The targets are set out in the National Development Program through 2030, adopted in June 2025. The program calls for nominal GDP to reach at least $30 billion and GDP per capita to rise to $4,500. International forecasts suggest Kyrgyzstan's economy will maintain strong growth in the near term, although a slowdown is expected. Following 11.1% growth in 2025, the IMF forecasts 9% growth in 2026 and 7% in 2027, while the World Bank projects 9.6% growth this year. However, both institutions have highlighted risks to the country's economic momentum, including a potential slowdown in re-export trade, weaker growth in Russia and China, rising energy prices, and tighter sanctions restrictions. To maintain rapid growth, Bishkek intends to support food processing, pharmaceuticals, chemicals, light manufacturing, machinery production, and mineral processing. The goal is to increase exports of domestically produced goods. Infrastructure-led Growth One of the country's largest infrastructure projects remains the China–Kyrgyzstan–Uzbekistan railway. Construction began in December 2024, with completion scheduled for 2030. The project is estimated to cost $4.7 billion, including $2.3 billion in loans from Chinese banks. China holds a 51% stake in the joint project company, while Kyrgyzstan and Uzbekistan each own 24.5%. The railway is expected to give Kyrgyzstan its first direct rail link to China and provide Uzbekistan with an alternative route to the Chinese market. For Bishkek, it offers an opportunity to generate transit revenue and develop logistics centers. However, the route's commercial viability will depend on freight volumes, tariffs, and the efficiency of border crossings. Another major project is the Kambarata-1 hydropower plant, which Kyrgyzstan is advancing jointly with Kazakhstan and Uzbekistan. Additional electricity generation capacity is needed, among other purposes, to support industrial expansion. On October 14, Kyrgyzstan's ambassador to Switzerland presented both projects to potential investors in Geneva. Bishkek also plans to encourage state-owned companies to issue Eurobonds, expand long-term financing through state banks, and develop the Tamchy special financial and investment zone to attract international capital. Logistics, information technology, tourism, and financial services have been identified as promising sectors. Risks At the same time, Kyrgyzstan's close economic ties with Russia create additional risks for its banking sector and foreign trade. The IMF has warned that exposure to international sanctions and weaknesses in financial oversight could disrupt banking relationships and cross-border trade. A further challenge is ensuring that major infrastructure projects benefit the wider...

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.