Economic Growth - The Times Of Central Asia

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Economic Growth

Development Spending in Kyrgyzstan Surpasses Social Spending for the First Time

The Kyrgyz government has reported strong economic performance in 2025, highlighting robust GDP growth and strengthened public finances. At a year-end meeting, Chairman of the Cabinet of Ministers Adylbek Kasymaliev announced that all state objectives had been met despite challenging conditions. According to Kasymaliev, gross domestic product is expected to grow by more than 10% by year’s end, positioning Kyrgyzstan among the global leaders in economic growth. The country’s GDP reached $20.5 billion, and for the first time in its history, the consolidated budget surpassed $11.5 billion. A budget surplus of $392 million was recorded, which Kasymaliev described as a sign of growing financial stability. He emphasized the country’s accelerated infrastructure development, with 341 new facilities commissioned in 2025. Projects include roads, parks, cultural and sports centers, and residential buildings, many implemented under State Mortgage Company initiatives. Notably, for the first time, development expenditures outpaced social expenditures, a shift aligned with the recommendations of international financial institutions. Macroeconomic improvements were also supported by data from the National Bank of Kyrgyzstan. As of the third quarter of 2025, the banking sector showed strong lending growth: the overall loan portfolio rose by 10.5% over the quarter and approximately 33% year-on-year. Consumer loans made up the largest share at 16.6%, followed by mortgages at 10.5% and agricultural loans at 3.1%. Expansion in the construction sector has been driven by both state spending and foreign investment. Meanwhile, the dollarization of the loan portfolio continued to decline, falling to 17.8% from over 20% at the start of the year. “High activity among the population and businesses has contributed to an increase in lending in the national currency over the nine months of 2025,” the National Bank stated.

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.

Foreign debt

Opinion: Is Uzbekistan Importing a Future Crisis?

Once hidden from the view of international investors, Uzbekistan is rapidly rewriting its economic narrative. Over the past eight years, the nation attracted over $113 billion in foreign investment, drawing financial firms and mutual funds eager to seize the momentum of Tashkent’s trade liberalization and its ambition to double GDP by 2030. And rightly so; 40% of the country’s population, which is the largest in Central Asia, is under the age of 25, while its gold production is within the top ten globally. Uzbekistan is in its breakout moment. With Uzbek bonds receiving a further upgrade to a BB rating from both Fitch and S&P Global, comparisons to Vietnam or Indonesia no longer seem aspirational. However, the question remains: Is Uzbekistan ready to set foot on the financial global stage, and, more importantly, is it structurally equipped to stay there? Amidst its sweeping economic transformation, IMF officials have warned the administration to remain vigilant against economic shocks beyond its control: volatile commodity prices, contractions in foreign investor liquidity, and consequently, tighter external financing. These warnings are not theoretical. They come from decades of IMF experience with financial crises in other emerging markets, such as the Latin American debt crises in the 1980s, the “Tequila Crisis” in 1994, and the “Asian Flu” in 1997. In those historic cases, newly liberalized economies suffered not because they lacked growth, but because they lacked a defense against the liquidity cycle. The economic reality is that global capital flows are often driven by decisions made in New York or London, not Tashkent. This economic phenomenon is often explained by the “liquidity model,” which argues that changes in exogenous liquidity conditions - driven by the economic situation of investor countries - shape capital flows into emerging markets. Thus, without sufficient financial market depth, emerging capital markets cannot absorb external shocks. And when global liquidity tightens, these flows can abruptly reverse, resulting in prolonged economic instability and loss of monetary sovereignty. The sequence unfolds as follows: capital inflows surge and balance-sheet vulnerabilities quietly build up; then an external shock - such as a monetary tightening in the creditor economy - causes inflows to slow; the local currency depreciates; and a feedback spiral of declining confidence and weakening balance sheets pushes the economy into crisis. Currency loses trust, struggles to recover, and money flees. Some initial signs of this pattern can be observed in Uzbekistan’s current boom. The economy is increasingly reliant on foreign borrowing: external debt as a share of GDP rose from 24.7% in 2017 to 61.4% in 2024, reaching $78.5 billion by June 2025. According to CEIC benchmarks, this level is already comparable to Poland’s 51.8% and Malaysia’s 69.9%, and now exceeds Kazakhstan’s 59.2%, reflecting growing dependence on financing from the World Bank, Eurobond investors, and major East Asian institutions. High debt levels alone do not necessarily imply instability. They can reflect efforts to accelerate domestic development. The real source of fragility in past crises was not the volume of debt but its denomination. When...

Economic Growth

ACRA Raises Kazakhstan Economic Growth Forecast

The Analytical Credit Rating Agency (ACRA) has released its updated forecast for Kazakhstan’s economy for 2026-2028, projecting annual growth of 5.3-5.9%. These figures exceed the government’s recent targets. According to the published report, the next three years will mark a period of accelerated expansion, driven by industry and construction, alongside strengthening value chains in services and agribusiness. The government's earlier forecast projected GDP growth of 5.4% in 2026, followed by stabilization at 5.3%. While ACRA offers a more optimistic outlook, it notes that achieving the targeted 6% growth will require a sharp increase in investment activity and a boost in foreign exchange earnings from exports. The agency also warns that accelerating growth may carry the risk of economic overheating and a new wave of inflation. Investment remains the weak link in Kazakhstan’s growth model. From 2021 to 2025, investment accounted for only 15% of GDP, significantly lower than in comparable economies and previous periods of rapid expansion. For example, during 2010-2014, investment levels held at 18%, and in earlier years, they reached as high as 20-22%. Without restoring higher investment levels, sustaining growth above 5.5% could prove difficult. Inflation risks also remain elevated. Contributing factors include household inflation expectations, imported inflation from neighboring countries, accelerated lending, and rising global food prices. Nevertheless, ACRA forecasts inflation to decline from 11.8% in 2025 to 8% in 2026, 6.2% in 2027, and 5.1% in 2028. The tenge is expected to gradually weaken to 555 per $ in 2026, 574 in 2027, and 594 in 2028. ACRA highlights three major risks over the next three years. The first is export and logistics vulnerabilities. Kazakhstan’s primary oil export route continues to run through Novorossiysk, and any disruption along this corridor would quickly impact the current account and put downward pressure on the tenge. The second risk concerns fiscal discipline. Rising expenditures are increasing reliance on transfers from the National Fund, which could reignite inflationary pressures if not managed prudently. The third is the depreciation of the Russian ruble. A weaker ruble boosts imports, reduces exports, and worsens Kazakhstan’s trade balance. While ACRA considers the likelihood of these risks occurring simultaneously to be low, their combined impact could seriously challenge Kazakhstan’s growth outlook. As previously reported by The Times of Central Asia, President Kassym-Jomart Tokayev expects Kazakhstan’s GDP to grow by 6% in 2025, surpassing the $300 billion threshold for the first time.

Economic Growth

Kyrgyzstan Reports Strong Economic Growth and Budget Surplus

Kyrgyzstan's consolidated budget for 2025 is expected to exceed $12.5 billion, marking the first time it will cross the historic threshold of one trillion soms. The announcement was made by Chairman of the Cabinet of Ministers Adylbek Kasymaliev during a government meeting on December 8. Kasymaliev stated that while the 2025 state budget was initially approved at the equivalent of $8 billion, it had expanded by $4.3 billion by year-end, leaving the country with a budget surplus of more than $110 million. According to the Statistics Department of the Eurasian Economic Commission, Kyrgyzstan was the only member of the Eurasian Economic Union (EAEU) to post a budget surplus in the first nine months of 2025. The surplus totaled $1 billion, with revenues reaching $4.9 billion and expenditures at $3.9 billion. By comparison, the surplus in the same period of 2024 was $0.5 billion. Citing International Monetary Fund data, Kasymaliev noted that Kyrgyzstan ranked among the top three countries globally in terms of real GDP growth in 2024. The national economy grew by 10% in the first ten months of 2025, with all major sectors showing expansion. The construction sector led with a remarkable 42.8% growth rate. GDP per capita for 2025, initially projected at $2,616, is now expected to reach $2,770 by the end of the year. Kyrgyzstan’s international reserves also saw a significant increase. As of the end of October 2025, reserves stood at $7.955 billion, up by $3.02 billion compared to October 2024, according to the National Bank. The National Statistics Committee earlier reported that Kyrgyzstan’s GDP grew by 11.5% in 2024. Services accounted for the largest share of GDP at 52.3%, followed by goods-producing industries at 33.3%, industry at 17%, construction at 7.7%, and agriculture at 8.6%. The Eurasian Development Bank (EDB) forecasts record-high economic growth for Kyrgyzstan in 2025, driven by robust investment activity. From January to October, fixed capital investment rose by 18.9%, with state budget funds and company resources accounting for 31% and 23% of that total, respectively.

Economic Growth

Kazakhstan Projects Strong GDP Growth as Economy Nears 300 Billion Dollars in 2025

Kazakhstan’s economy is entering a new phase of growth. By the end of 2025, the country’s gross domestic product is projected to exceed $300 billion for the first time, President Kassym-Jomart Tokayev announced at a national award ceremony for the Altyn Sapa, Paryz, and Best Product of Kazakhstan prizes. Over the past decade, Kazakhstan’s GDP has shown consistent growth in absolute terms, with the exception of the pandemic year of 2020, when the economy contracted to $171.1 billion. Since then, the country has reached new historical highs each year, from $197.1 billion in 2021 to $288.41 billion in 2024. In 2025, growth is expected to reach a record level.The president noted that, over the past five years, growth in the real sector has become noticeably more balanced. Gross value added in the manufacturing industry increased by 25 percent, outpacing growth in the extractive sector. “Economic growth is expected to exceed 6% this year,” Tokayev said. “Moreover, GDP is projected to exceed $300 billion for the first time” The president highlighted that, over the past five years, growth in the real sector has become noticeably more balanced. Gross value added in the manufacturing industry increased by 25%, outpacing the growth of the extractive sector. Investments in fixed capital grew by 70% over the same period, and labor productivity rose by 40%. As a result, non-resource exports doubled, the number of exporters tripled, and the geography of supply expanded to 140 countries. According to Tokayev, small and medium-sized enterprises (SMEs) now account for 40% of GDP and remain one of the most dynamic segments of the economy. “Over the past five years, the number of SMEs has increased by 1.5 times, and their output by 2.5 times. Today, 4.5 million people work in the business sector, almost half of the country’s employed population,” the president said. Tokayev also placed particular emphasis on the finalization of certain provisions in the new Tax Code, which is set to take effect in 2026. The president acknowledged that he had received a large number of appeals from entrepreneurs and instructed the government to carefully review the most problematic provisions. “It is important to understand that the sustainable development of entrepreneurship is based on the fulfillment of mutual obligations: the state creates the climate, and businesses pay taxes. The government must find a reasonable balance, there is no other option,” he stated. The president also called for continued development of the country’s digital business ecosystem to enhance transparency and reduce bureaucratic hurdles. Kazakhstan plans to significantly increase investment in its economy over the next five years, with the goal of nearly tripling its volume by 2029.