Economic Growth - The Times Of Central Asia

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IMF Forecasts 2.3% Growth in Turkmenistan’s Economy

In her report on the International Monetary Fund (IMF) mission to Turkmenistan, from 27 March – 9 April, Ms. Anna Bordon announced that Turkmenistan’s economy is set to expand by around at 2.3% in the coming year. According to the IMF mission’s assessment of the economic outlook and risks of Turkmenistan’s macroeconomic and financial developments, the country’s economic activity moderated in 2023 and inflation is on the rise. IMF staff estimate that post-pandemic growth surged to 5.3% in 2022 before falling to 2% in early 2023 as world commodity prices subsided, monetary policy tightened, and pressures on exchange rates abated. A temporary situation, inflation began to pick up later in 2023 and is projected to gradually rise to 8% mainly due to the country’s policy to increase public sector wages and pensions by 10% per year. “To improve spending efficiency, Turkmenistan should enhance its targeting of social spending, move toward public wage increases based on performance, and enhance public investment management,” said Ms Borden. The IMF estimates that growth of hydrocarbon production will stabilize at around 2%. In contrast, non-hydrocarbon growth is expected to remain subdued, given the challenging geopolitical and business environment, investment inefficiencies, the significant overvaluation of real exchange rates, and burdensome standards imposed by international regulations. The end of mission statement concluded: “The authorities are adequately focused on economic diversification. A more market-based economic diversification strategy would be preferable. Sustained macroeconomic stability is a pre-requisite for diversification, which importantly requires adjusting the exchange rate and eliminating exchange restrictions.” It was also recommended that Turkmenistan “gradually phase out administrative controls and reduce the footprint of the state in the economy”.

Economic Growth Turkmenistan

Turkmenistan’s GDP Expands by 6.3% in First Quarter of 2024

In the first quarter of 2024, Turkmenistan demonstrated stable economic growth, President Serdar Berdimuhamedov said at a meeting of the Cabinet of Ministers, where the results of the first three months of this year were summarized. Berdimuhamedov stated that positive dynamics are evident in the key economic indicators. Specifically, industrial production increased by 4.7 %, the transport and communication sector by 6.6%, the service sector by 7.6%, the trade sector by 8.2%, and the agricultural sector by 4.1%. The country's average salary also rose by 10% in the first quarter. In addition to the country’s economic growth, the president observed that the country is rapidly developing its large industrial and social infrastructure, which includes new villages, residential buildings, entertainment and medical facilities, and supporting families with new schools and kindergartens. These initiatives are being carried out in accordance with Turkmenistan's 2022–2028 socioeconomic development strategic program.

Investments Economic Growth Uzbekistan Central Asia Kazakhstan Tajikistan Kyrgyzstan Finance

What to Expect from Central Asian Economies in 2024

The pandemic dealt a major blow to the global economy and to the economies of Central Asia in particular, which, despite some domestic production, rely on imports for a significant share (in monetary terms) of their consumption. The Russia-Ukraine war acted as an economic shock to these economies, which had yet to recover from the damage done by Covid. While there is considerable intra-regional potential in terms of manufacturing and trade, most of the imports into Central Asia come from China, Turkey and Europe. At the same time, transnational corporations in Russia account for almost half of Central Asian demand for consumer goods. In 2022, Central Asian countries began to reconfigure their supply chains to comply with sanctions. However, since almost half of the Russian economy was integrated with international corporations and supplied Central Asia, severing these trade links proved almost impossible. This is clearly reflected in the statistics for 2023, where almost all Central Asian countries saw re-exports of Western goods to Russia increase by tens or hundreds of times. In terms of information and statistics, the most open countries of the region are Kyrgyzstan and Kazakhstan. Uzbekistan is quickly catching up, with government agencies launching websites where a significant amount of data can be accessed, both about the economy and the country as a whole. Economic indicators for Central Asian countries in 2023 Countries (alphabetical order) GDP (in $ bln)* Growth, y-o-y Inflation, y-o-y Kazakhstan 237.00 5.1% 9.80% Kyrgyzstan 11.90 6.2% 7.30% Tajikistan 11.36 8.3% 3.80% Turkmenistan 60.10 6.3% 5.90% Uzbekistan 90.80 6.0% 8.77% * Approximations Excluding Kazakhstan, the region's largest economy (though still resource-based), whose GDP is larger than the other four countries’ combined, Central Asia can be characterized as a low-income region. With average wages in a range of $250–400 per month, the countries rely heavily on trade (imports) for food, clothing, and basic goods. No country in the region is fully self-sufficient in terms of producing consumer goods, which, given the complex logistics, poses a challenge during swings in markets or geopolitical instability. Still, the last five years have been favorable for the region: there have been fewer territorial disputes and border conflicts, while politicians in all five countries share the view that the C5 and C5+ formats can be an effective tool to develop intra-regional ties and a common market. Last year, the five presidents from the region met with the leaders of China, Russia and the United States. In 2023, the countries fully recovered from the pandemic downturn, and each economy grew in annual terms. Due to its high base ($200+ billion GDP), Kazakhstan turned in the lowest growth at 5.1%. Its economy is driven mainly by resource extraction, metallurgy and agriculture. Given its size – an area of 2.7 million square kilometers – logistics is a big challenge for doing business in the country. Last year, according to preliminary data, Kazakhstan produced 90 million tons of oil, with exports mostly heading to Russia’s Novorossiysk port through the Caspian Pipeline Consortium (CPC). Kazakh...

Economic Growth Economy

Kazakhstan’s Government aims For 6% Economic Growth

In January 2024, Kazakhstan’s economic growth was 3.9%, it was announced at a government meeting on February 13th. The country’s new prime minister, Olzhas Bektenov emphasized that the government’s priority task for this year is to ensure growth of no less than 6%. Bektenov stressed that priority should be given to manufacturing products with high added value, as well as to exporting manufactured products. “Financial support should be provided proportionally depending on the level of technological complexity of production. That is, the more complex the production and the more technologically advanced, the lower the loan rate or the longer the loan term,” the prime minister said. Bektenov also announced that there will be no increase in the value-added tax rate. “We must look for other ways to replenish budget revenues,” he said. On February 9th, at the first government meeting after he was appointed Kazakhstan’s prime minister, Bektenov outlined urgent tasks for his new cabinet, emphasizing that state budget expenditures must be clearly prioritized with an emphasis on obtaining full economic returns, and unproductive expenses should be completely excluded. The prime minister demanded that large industrial enterprises, primarily in the extractive industries, submit specific plans for the creation of new facilities manufacturing products with high added value. He also recommended domestic industrial giants increase the purchases of Kazakh goods, works, and services.

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Kazakhstan Shapes an Ambitious Future

As Kazakhstan continues on its path towards economic expansion and modernization, it has set forth a revitalization and growth vision for 2024 and beyond, underpinned by a series of ambitious reforms and strategic investments. A central part to President Kassym-Jomart Tokayev’s vision, which he also detailed in a government meeting on February 7th, is the development of a sustainable and inclusive economy driven by innovation, strategic foreign investment and proactive engagement with the global community. Building on the 2023 growth momentum There are positive indications that Kazakhstan is on the right track, despite challenges posed by ongoing global geopolitical risks and uncertainties. Its strong economic expansion continued in 2023, as gross domestic product (GDP) increased by nearly 5% as of the third quarter. The government is aiming to accelerate the pace of growth further throughout the remainder of the decade. Tokayev said in his February 7th speech that the target was to increase economic output to $450 billion by 2029, stressing that to do this, the country will need 6% annual GDP growth. Attracting investment To achieve this ambitious goal, the country’s leadership is currently implementing a series of reforms, which are designed to attract a substantial influx of foreign investment (of at least $150 billion in total) by adopting environmental, social and governance (ESG) principles, as well as by enhancing the country’s overall investment climate. Examples of these initiatives include “green bonds” introduced in 2017; the sustainable finance initiatives presented since 2021 via the Astana International Financial Center, and the mandatory ESG reporting framework for companies listed on the Astana International Exchange. A pivotal element in Kazakhstan’s comprehensive series of economic reforms and investment strategies is the establishment of the Investment Headquarters, which is charged with the critical mission of enhancing the investment climate within Kazakhstan while ensuring qualitatively the proper execution of investment projects. At the same time, the government is working on a new Tax Code that should comprehensively reset the dynamics between the state and the private sector. The development of this code is guided by the need for a delicate balance between creating an environment conducive to investment, and securing the necessary revenues for the national budget. Local capacity building The strategic plan behind the reforms foresees the introduction and transfer of cutting-edge technologies, the localization of production processes, and the establishment of high value-added clusters. These clusters would be strategically focused on driving the acceleration of the manufacturing sector. Potential sectors to benefit from these clusters include green technology, finance, and agriculture. Furthermore, the legislative and institutional framework will be implemented through the enactment of a fresh law on industrial policy and the establishment of a new Ministry of Industry and Construction. A focus on standards of living These steps represent a commitment to improving the overall well-being of the population in tandem with ensuring economic growth. Tokayev has underscored that the focus of these efforts extends beyond merely achieving macroeconomic expansion and emphasized that economic developments must have a...

Economic Growth

Despite Challenges, Kyrgyzstan Showed Steady Economic Growth in 2023

Despite global uncertainties, Kyrgyzstan’s economic development in 2023 showed good results, the country’s Ministry of Economy and Commerce said on January 16th. Economic growth over the past three years averaged 6.9% — 5.5% in 2021, 9% in 2022, and 6.2% in 2023, indicating the stability of the economy and its gradual adaptation to the post-Covid world and current geopolitical uncertainty, the ministry said in a statement. According to preliminary estimates from the National Statistical Committee, in 2023 Kyrgyzstan’s gross domestic product amounted to $13.7 billion. In construction, growth was at 10.3%, in the services sector 6.2%, in industry 2.7%, and in agriculture 0.6%. Industries producing goods accounted for 32.3% of GDP, and industries providing services 50.8%. The volume of foreign trade from January-November 2023 amounted to $13.9 billion, an increase of 29% compared to January-November 2022. Kyrgyzstan’s exports amounted to $2.8 billion and increased by 36.7%, and imports amounted to $11.1 billion, up 27.2%. In the structure of trade turnover, exports accounted for 20.2%, and imports 79.8%. Kyrgyzstan’s trade with fellow member states of the Eurasian Economic Union (EEU) - Armenia, Belarus, Kazakhstan, and Russia - amounted to $3.9 billion, a decrease of 11% compared to January-November 2022. Kyrgyzstan’s largest trading partners were Russia (65.9%) and Kazakhstan (31.7%). Meanwhile, Kyrgyzstan’s trade with countries outside the EEU from January-November 2023 amounted to $10 billion, a 1.6-fold increase compared to January-November 2022.