Economic Growth - The Times Of Central Asia

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Economy

IMF Warns of Risks for Rapidly Growing Kyrgyz Economy

Kyrgyzstan continues to record strong economic growth and rising per capita income. At the same time, elevated inflation above the National Bank’s 5%-7% target range, rapid credit expansion, strong wage growth, and high liquidity point to signs of economic overheating, requiring timely macroeconomic policy adjustments. These are the key points of an International Monetary Fund (IMF) statement following consultations with Kyrgyz authorities in Bishkek between March 18 and April 1. The IMF noted that after recording fiscal surpluses between 2023 and 2025, the overall fiscal balance is projected to shift into deficit in 2026, reflecting higher public-sector wages and increased capital spending. The mission also emphasized that monetary policy should remain focused on bringing inflation back within the National Bank’s target range. Strengthening the central bank’s independence and governance remains critical to safeguarding price stability. Repeated transfers of National Bank profits to the state budget, while capital remains below statutory thresholds, risk undermining institutional credibility and the effectiveness of monetary policy. The IMF urged the authorities to uphold the provisions of the constitutional law governing the National Bank and to suspend regular profit transfers until capital is adequately restored. According to the IMF, Kyrgyzstan’s banking sector is stable, well capitalized, and liquid. However, nonperforming loans remain elevated, and rapid credit growth could increase vulnerabilities if macroeconomic conditions deteriorate. The mission stressed that structural reforms remain essential to support sustainable and inclusive growth. These should focus on strengthening governance, reducing the state’s role in the economy, and fostering private-sector-led development. Key priorities include reforming state-owned enterprises, improving the business environment and competition, strengthening the rule of law and anti-corruption efforts, and addressing informality and labor market rigidities. According to the National Statistical Committee, Kyrgyzstan’s gross domestic product (GDP) grew by 11.1% in 2025, while inflation reached 9.4%. The government aims to sustain economic growth under the National Development Program through 2030, targeting average annual GDP growth of 8%, total GDP of at least $30 billion, and GDP per capita of $4,500. The Asian Development Bank (ADB) also forecasts continued strong growth, projecting GDP expansion of 8.9% in 2026 and 8.4% in 2027, following 11.1% growth in 2025. Growth is expected to moderate as construction and trade normalize, although domestic demand will remain the main driver, supported by resilient remittance inflows and sustained investment under the National Development Program. ADB projects inflation to rise to 10.3% in 2026 before easing to 8.5% in 2027, driven by strong domestic demand and planned increases in electricity and heating tariffs. Concerns about overheating are not new. A July 2025 meeting at the Kyrgyz Ministry of Economy and Commerce highlighted structural imbalances, including a widening gap between income growth and labor productivity, rising inflation, labor shortages, increased public spending, and rapid growth in consumer lending. Economist Azamat Akeneev told 24.kg that sustainable growth is not possible without improvements in labor productivity and exports. “If the economy grows through consumption and government spending rather than competitiveness and expansion into foreign markets, sooner or later an adjustment phase...

Economic Growth

ADB Growth Forecast Points to Strong Expansion in Tajikistan

Asian Development Bank (ADB) forecasts that Tajikistan’s economy will maintain strong growth over the next two years, driven primarily by industrial expansion and the services sector. In its latest Asian Development Outlook (April 2026), the bank projects that gross domestic product will grow by 7.3% in 2026 and 6.8% in 2027. This follows an estimated 8.4% expansion in 2025, indicating a slight moderation but continued robust performance. ADB attributes the outlook to improving industrial competitiveness and rising value-added production, which are expected to support long-term economic development and job creation. “Tajikistan’s strong growth opens up opportunities to accelerate job creation,” said Ko Sakamoto, ADB country director for Tajikistan. “By developing competitive, value-adding industries from food processing and textiles to mineral products, the country can translate growth into more and better jobs.” At the same time, inflation is projected to rise to 4.0% in 2026 and 4.5% in 2027. According to ADB, this increase will be driven by stronger consumer lending, remittance inflows, higher public sector wages, supply chain pressures, and adjustments to utility tariffs. The bank noted that the outlook remains subject to revision given the uncertain regional environment. Despite recent gains, ADB cautioned that Tajikistan’s economic structure remains vulnerable. While industrial output has grown, the country continues to depend heavily on a narrow range of products. Exports are dominated by raw materials and low- to mid-level processed goods, with higher value-added manufactured products accounting for less than 10% of total merchandise exports. To address these challenges, the report recommends a broader, ecosystem-based industrial policy. This would involve support for specific sectors, along with improvements in infrastructure, workforce skills, access to finance, and the overall business environment. ADB’s earlier assessments highlight mixed socioeconomic trends. While poverty has declined significantly from 30.9% in 2020 to 19.9% in 2024, inequality and structural constraints continue to pose challenges to long-term development.

tourism industry

Kyrgyzstan Earned Almost $1.1 Billion from Tourism in 2025

Kyrgyzstan’s tourism industry continued to expand in 2025, remaining an important contributor to the country’s economic growth. According to the National Statistical Committee, revenue from foreign visitors reached $1.098 billion in 2025, up from $1.016 billion in 2024. Tourism accounted for 3.8% of GDP, compared to 3.6% the previous year. At the same time, Kyrgyz citizens spent $564 million on travel abroad. As of January 1, 2026, the country had 148,100 registered tourism-related businesses. Revenue from passenger transportation serving tourists across all modes of transport totaled nearly 17.3 billion soms (approximately $197 million), compared to 16.9 billion soms in 2024. Kyrgyzstan’s main tourist attractions include Lake Issyk-Kul and its mountain ski resorts, with the largest and most popular located in Karakol. In recent years, more than 95% of foreign tourists have come from neighboring Central Asian countries and Russia. According to the Tourism Development Fund, most visitors arrive from Uzbekistan, followed by Kazakhstan and Russia. At the same time, the number of tourists from Arab and European countries, as well as from China, India, and the United States, has been steadily increasing.

world trade organization

Turkmenistan Steps Up Preparations for WTO Membership Amid Economic Growth

Turkmenistan is intensifying efforts to integrate into the global trading system, with officials reaffirming the country’s intention to move towards membership in the World Trade Organization (WTO). The announcement was made by Deputy Minister of Finance and Economy Perhat Yagshiyev during the forum “Investing in Turkmenistan’s Future,” according to local media reports. Yagshiyev said the accession process is progressing in a structured manner. A draft memorandum on the country’s foreign trade regime has been prepared, while WTO standards are being introduced gradually in cooperation with the organisation’s Secretariat and international partners. Authorities also point to positive macroeconomic trends. Official data indicate that Turkmenistan’s gross domestic product exceeded $77.4 billion in 2025, reflecting growth of 6.3%. Investment volumes reached more than $12.8 billion, up 6% year-on-year, while inflation reportedly declined to 3.2%. External debt remains below 3% of GDP, and officials say the country has not recorded domestic public debt since January 2022. Foreign trade turnover rose by 10.3% to $21.8 billion. The oil and gas sector, petrochemicals, energy, construction and agriculture continue to be highlighted by the government as priority areas for foreign investment. Transport infrastructure development remains a central component of economic policy. Turkmenistan is participating in several international logistics initiatives, including the Trans-Caspian corridor, the North-South transport route and the Lazurite corridor. The third phase of the Ashgabat-Turkmenabat highway is expected to be completed in 2026, which authorities say will strengthen the country’s role as a regional transit hub. Preparations for WTO accession are also linked to the modernisation of trade procedures. Galina Romanova, a representative of the Ministry of Finance and Economy, previously stated that improving trade facilitation is a key priority. “We are taking consistent steps to modernise customs procedures and introduce digital solutions that make trade faster and more transparent,” she said. Turkmenistan was granted observer status in the WTO on July 22, 2020, following a decision by the organisation’s General Council in Geneva.

Domestic trade

Kazakhstan’s Domestic Trade Growth Slows as Consumer Demand Weakens

The growth of domestic trade in Kazakhstan slowed markedly in early 2026, reinforcing signs of weakening consumer activity and increased business caution. According to the National Statistics Bureau, the trade sector expanded by only 3.4% in January–February, compared with 6% during the same period a year earlier. Growth slowed significantly, affecting both wholesale and retail trade. Analysts at Halyk Finance believe the trend reflects deeper economic processes rather than a short-term fluctuation. “The dynamics at the start of the year point to a cooling of aggregate demand and economic activity,” Halyk Finance said. Wholesale trade, a key indicator of business activity, showed the most pronounced slowdown. Growth fell to 3.8%, down from 6.6% a year earlier. In the first two months of the year, the volume of wholesale transactions reached $9.6 billion. However, the structure of trade indicates a predominance of non-food and industrial goods, reflecting weaker corporate demand. Experts also note that declining oil production has exerted additional pressure on the sector, directly affecting wholesale sales volumes. The situation in retail trade remains mixed. Overall growth stood at 2.6%, driven largely by large retail chains. Sales in organized retail increased by 3.7%, while turnover among individual entrepreneurs and traditional markets continued to decline, falling by 1%. This trend reflects ongoing structural changes in the sector. The market is gradually shifting in favor of large retail players, while small businesses face growing competitive pressure. Changes in consumer spending patterns are also evident. Sales of food products rose by 9.1%, whereas non-food sales increased by only 0.2%, despite accounting for the majority of retail turnover. This suggests that households are becoming more cautious, focusing spending on essential goods and postponing purchases of more expensive items. Another indicator of weakening demand is the rise in inventory levels. As of early March, inventories totaled approximately $2.5 billion, equivalent to around 77 days of sales. Combined with slower turnover, this points to a softening of consumer demand. Overall, analysts note that domestic trade continues to grow, but the pace of expansion is slowing and becoming less sustainable. Business activity remains subdued, consumers are saving more, and the market is gradually shifting toward more formal retail participants. The Times of Central Asia previously reported that the government is considering support measures for key sectors, including dairy and baking, in an effort to curb inflation and sustain demand.

TCA Interviews

Can Special Economic Zones Become a Driver of Economic Growth in Kazakhstan?

Kazakhstan currently has 17 special economic zones (SEZs) operating across 14 regions, three of which were created in 2025. How effective is this tool for attracting investment, reducing import dependence, and developing exports? And how will the SEZ model evolve within the framework of the Single Coordination Center? Yerlan Kusainov, Deputy Chairman of the Board of JSC Kazakhstan Center for Industry and Export “QazIndustry,” discussed these issues with The Times of Central Asia. TCA: Kazakhstan currently has 17 SEZs. How many companies operate in them, and what is the total volume of production? Kusainov: There are 1,144 participants registered in SEZ territories. Of these, 558 projects are already operational, while another 586 are in the implementation stage. Since the establishment of the zones, enterprises have produced goods worth 13.9 trillion tenge (about $28 billion). The current occupancy rate of the SEZs is 42.4%. This indicator is dynamic and may change as new contracts are signed or as some participants cease operations. TCA: What types of products are manufactured in the SEZs, and how does this contribute to reducing import dependence? Kusainov: The SEZs cover a wide range of industries, including manufacturing, construction, transport and logistics, and tourism. For example, the Aktau Seaport SEZ is implementing projects in the chemical industry, including the production of caustic soda and hydrochloric acid by Topan Chemical Industries. These products are widely used in metallurgy, the oil and gas industry, and water treatment. Previously, a significant portion of such products was imported, but production is now being localized in Kazakhstan. A major petrochemical cluster is being formed in the Jibek Joly SEZ. Projects there include the production of mineral fertilizers, chemical reagents, and polymer products. Participating companies include HIM-plus, KPM Plast, Chemical Engineering, and C9 Technologies. These projects are expected to supply the domestic market while also supporting exports. In the Pavlodar SEZ, projects are being implemented in metallurgy and petrochemicals. These include the production of calcined petroleum coke by UPNC-PV, car wheels by Vector Pavlodar, and aluminum ingots and alloys by LeichtMetall KZ and Unimetals. These products are exported to markets in Europe and Asia. The Ontustik SEZ focuses on the textile industry, where a full cotton-processing cycle has been established, from raw materials to finished products. Enterprises there produce cotton and synthetic yarn, carpets, and other textile goods. Another important site is the Park of Innovative Technologies SEZ, where projects in digital technologies and electronics are being developed. Key participants include the Institute of Physics and Technology, KT Cloud Lab, which is building a data center, and DS Multimedia CA, which manufactures electronic components. Together, these projects contribute to reducing import dependence and building export-oriented industries. TCA: What is the export volume of SEZ enterprises? Kusainov: The total export volume from SEZ enterprises has reached about $2 billion. In 2025 alone, exports amounted to approximately $490 million, compared with $148 million in 2021, an increase of 231%. TCA: How much investment has been attracted through the SEZs? Kusainov: Over the entire period of...