Economic Impact - The Times Of Central Asia

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Economic Growth

World Bank Warns of Slowing Tajikistan Economy

Tajikistan’s economic growth may slow in the coming years due to mounting foreign policy and regional risks, according to a new report from the World Bank. Vulnerability to External Shocks The report highlights several external vulnerabilities that could impact Tajikistan’s economy. These include shifts in Russia’s migration policies, heightened global instability, and ongoing armed conflicts. “Tighter migration policies and restrictions on Tajik workers in Russia threaten to significantly reduce remittance flows, leading to lower economic growth, increased poverty, and worsening fiscal and external balances,” the World Bank stated. Growing global protectionism is also expected to raise Tajikistan’s foreign trade costs. The report notes that recent U.S. tariff increases on imports from several of Dushanbe’s key trading partners have triggered retaliatory measures from countries like China. These developments could drive up import costs and intensify logistical pressures. Additionally, volatility in global commodity prices is expected to impact Tajik exports. While falling oil and raw material prices could reduce export earnings, especially for aluminum, zinc, and ores, high global gold prices in 2025 may provide a partial offset through increased revenues. Impact of Regional Conflicts The World Bank also warns that ongoing conflicts in Ukraine and the Middle East could further disrupt global supply chains, raising energy and logistics costs. These challenges would translate into higher import prices for Tajikistan. Conversely, the report suggests that a potential easing of sanctions and normalization of relations between the U.S. and Russia could destabilize Central Asian economies. However, the implications of such a shift remain uncertain and difficult to forecast. Medium-Term Outlook Despite these headwinds, the World Bank expects Tajikistan’s economy to remain stable, albeit with a decelerating growth trajectory: 8.4% in 2024 7.0% in 2025 4.9% in 2026 4.7% in 2027 The projected slowdown is gradual and not expected to result in a recession. Similar concerns have been echoed by other institutions. The Asian Development Bank and the Eurasian Fund for Stabilization and Development have also forecast a gradual slowdown in Tajikistan’s economic growth over the medium term.

Caspian Sea

The Caspian Sea Hits Historic Low

The Caspian Sea has dropped to its lowest recorded level, now sitting at less than 29 meters below sea level. The northern basin, bordering Russia and Kazakhstan, is shrinking particularly rapidly. As the water recedes, the exposed seabed is threatening key marine ecosystems. Experts warn the decline is already causing serious disruption to biodiversity in the region. Declining Volga Flow and Climate Change The downward trend in sea levels began in the 1990s and has accelerated since 2020, with a nearly 80-centimeter drop in the past four years. The primary factor is a decrease in the annual flow of the Volga River, which supplies approximately 80% of the Caspian's inflow and contributes 64% to the lake's total water balance. In recent years, the Volga’s annual discharge has ranged between 210 and 232 cubic kilometers, well below the historical average of around 250 cubic kilometers. At the same time, rising air temperatures are increasing evaporation rates, further depleting water levels. Scientists link these changes to global climate change and the ongoing rise in greenhouse gas emissions. Ecological and Economic Impact Human activity is compounding the problem. Significant water extraction from rivers for agriculture, industry, and municipal use is reducing the volume of water reaching the sea. Russia’s Ministry of Natural Resources is currently developing a comprehensive program to adapt to these shifting environmental conditions. The initiative aims to enhance forecasting, mitigate the consequences of shallowing, and adjust economic activities to reflect the new hydrological realities. Experts suggest that only a sustained annual inflow of around 270 cubic kilometers, comparable to levels recorded in the 1970s and 1990s, can halt the lake's ongoing decline. Changing Coastlines and Public Concern A recent video by Kazakh filmmaker Adai Myrzatay has stirred widespread attention on social media. The footage juxtaposes images of the Caspian coastline in 2013 and 2025. Twelve years ago, the pier was surrounded by open water and untouched shoreline. Today, the water has receded dramatically. Bushes now encircle the pier, and high-rise buildings stand where the shoreline once lay. The video has been viewed over 1.5 million times. The falling water level is leading to the loss of biological diversity and shrinking spawning grounds for species such as the Caspian seal and sturgeon. The shallowing is also disrupting shipping and fishing operations and raising the risk of international disputes over increasingly scarce water resources. A Shared Challenge for Five Nations The Caspian Sea, the world’s largest enclosed inland body of water, receives inflow from more than 130 rivers, including the Volga, Ural, Terek, Sulak, and Samur. Its coastline is shared by five countries: Russia, Kazakhstan, Turkmenistan, Azerbaijan, and Iran. While the Volga's inflow increased slightly to 232 cubic kilometers in 2024, it remains insufficient to reverse or even stabilize the sea’s decline. Experts agree that regional cooperation and a coordinated, long-term strategy for water resource management are essential to confronting this environmental crisis.

Metallurgy

Kazakhstan’s Surge in Metallurgical Output Raises Alarm in Russia

Kazakhstan is poised to double its copper ore production to 300 million tons by 2030, with the Aidarly, Koksay, and Benkala deposits leading the expansion. This ambitious plan was announced by Deputy Minister of Industry and Construction Olzhas Saparbekov during a recent government meeting. A Strategic Shift Toward Processing Alongside copper, Kazakhstan plans to expand iron ore production by 40%, aiming for 52 million tons. This increase will be driven by enterprise modernization and new projects producing hot-briquetted iron. In 2024, metallurgical ore production grew by 7.8%, while total metal output rose by 6.9%. Authorities are shifting focus from raw extraction to deep processing and the development of medium- and high-tech industries. By 2025, copper processing is expected to double, aluminum processing will increase by 50%, lead processing will more than double, and zinc output will rise by 11%. According to Saparbekov, these efforts will allow Kazakhstan to “utilize domestic production capacities and expand the output of finished products,” including wire rod, cable and wire products, batteries, window profiles, fittings, and bimetallic radiators. New projects also aim to produce brass components and industrial batteries. Economic Impact and Investment Plans The mining and metallurgical sector currently contributes 8% to Kazakhstan’s GDP, generating over $26.4 billion annually. The industry employs approximately 224,000 people. In 2024 alone, more than $3.2 billion was invested in metallurgy, while labor productivity increased by 9.4%, reaching $102,000 per worker. In 2025, Kazakhstan plans to implement 190 industrial projects worth a combined $3 billion. Of these, 28 projects in the mining and metallurgical sector, valued at $837 million, are expected to create 6,500 new jobs. Priority initiatives include the production of seamless pipes and aluminum radiators in Karaganda, aluminum profiles in the Turkestan Region, ferroalloys in Pavlodar, and cathode copper in the Zhambyl Region. Rising Tensions with Russia However, Kazakhstan’s rapid metallurgical growth is stirring concern in neighboring Russia. In the first half of 2025, domestic steel demand in Russia fell by 14-15%, with the machine-building and energy sectors seeing a sharper decline of 25%. Severstal CEO Alexander Shevelev told Kommersant that increasing supplies from Kazakhstan, alongside imports from China, are straining Russia’s market and may force plant closures. He identified particularly intense competition in Siberia and the Russian Far East. Severstal has warned that, without protective measures under the Eurasian Economic Union (EAEU), pressure from Kazakh imports could spread to other Russian regions. In response, Russia is considering launching an anti-dumping investigation into Kazakh steel imports. Such a move could significantly impact Kazakh exporters, who are looking to increase shipments amid weak domestic demand in neighboring markets. According to the World Steel Association, Russia’s steel production declined by 5.2% between January and May 2025. The drop is attributed to low global prices, high interest rates, rising production costs, and sluggish industrial activity.

Gold Deposit

Kyrgyzstan Launches Major Gold Exploration at Historic Makmal Deposit

Kyrgyzstan has initiated large-scale geological exploration at the historic Makmal gold deposit in the Jalal-Abad region, marking the first such effort in decades. The announcement was made by Kyrgyzaltyn, the state-owned enterprise responsible for gold and precious metals mining. According to the company, its subsidiary, Makmal Gold Company, has begun exploratory drilling in the southwestern section of the mine, an area previously untouched by mining operations. Soviet-era geological surveys suggest that this zone may hold up to four tons of gold reserves. "Extensive work is underway to extend the life of the Makmal mine," the Kyrgyzaltyn press service stated. "We plan to drill 19 wells at depths ranging from 140 to 400 meters. This will help us better define reserves and create additional employment opportunities." The exploration will proceed in two phases. In the first stage, geologists will drill a total of 3,275 meters. If results are favorable, a one-kilometer tunnel will be constructed to allow for precise reserve estimation, laying the groundwork for future industrial extraction. Kyrgyzaltyn also plans to evaluate other previously unexplored areas of the deposit. Historic and Economic Significance The Makmal deposit, one of Kyrgyzstan’s earliest gold mining sites, began industrial operations in 1986. Originally projected to last ten years, the discovery of new veins has kept the mine active to the present day. Currently, the mine contributes more than 95% of budget revenues for the Toguz-Toro district. Makmalzoloto, the operator, has also invested significantly in regional infrastructure, allocating 54 million Kyrgyz som (approximately $618,000) over the past three years, with an additional 50 million som ($572,000) directed toward charitable initiatives. The company employs more than 500 workers, nearly all of whom are local residents. While the annual output is modest, less than one ton, Makmal remains among the ten largest operational gold mines in the country. Kyrgyzstan has around 2,500 registered mineral deposits, of which 46 are classified as large.

India-Pakistan Conflict

Despite Ceasefire India-Pakistan Conflict Sends Ripples Through Central Asia

Despite a recent ceasefire agreement between India and Pakistan, renewed hostilities remain a looming threat. The latest clashes between the two nuclear-armed neighbors have direct and potentially lasting repercussions for Central Asia’s political stability and economic development. Ceasefire Amid Escalation Armed conflict erupted on May 7, when New Delhi launched “Operation Sindoor,” targeting what it described as terrorist infrastructure within Pakistan. The move followed a deadly terrorist attack on April 22 in Pahalgam, Jammu and Kashmir, which killed 26 people. India accused Pakistan of complicity, a charge Islamabad rejected, condemning the airstrikes as an “act of war.” Full-scale hostilities ensued for several days, raising alarms across the broader region. By May 11, a ceasefire was brokered, though both sides warned that fighting could resume if provoked. Given the eight-decade-long volatility along their shared border, the risk of future escalations remains significant. Whilst Pakistan credited the U.S. for facilitating the ceasefire, specifically highlighting Senator Rubio and what it described as direct intervention by President Trump, India maintained that the agreement was a result of direct communication between the Directors General of Military Operations (DGMOs). In a formal televised address, Foreign Secretary Vikram Misri emphasized that the ceasefire was a "bilateral" decision reached via military hotlines, omitting any mention of Trump or Rubio. “Both sides agreed to cease all firing and military actions on land,” Misri stated firmly, reiterating India’s stance that no third party played a role in its interactions with Pakistan. Disruption to Tourism Flows One immediate economic impact of the conflict has been felt in Central Asia’s tourism sector. In recent years, Kazakhstan, especially Almaty, has become an increasingly popular destination for Indian travelers, aided by a visa-free regime that permits 14-day stays. The country also hosts large numbers of Indian and Pakistani students, along with medical tourists and business travelers. Many Indian visitors rely on budget carriers such as IndiGo, which previously operated routes from Delhi to Almaty and Tashkent using airspace over Pakistan. The closure of this airspace led to increased costs and logistical complications. IndiGo suspended flights to both cities on April 27 and 28, respectively. Should hostilities resume, these suspensions could be extended, potentially setting back Central Asia’s still-fragile tourism recovery. Infrastructure and Trade at Risk The geopolitical instability also jeopardizes key infrastructure projects and trade routes. Kazakhstan and Uzbekistan have both enhanced connectivity with Pakistan through distinct strategies, with Kazakhstan integrating into multilateral frameworks like the Middle Corridor and QTTA, and Uzbekistan focusing on tactical bilateral projects such as the Termez–Karachi transport corridor and Trans-Afghan Railway. Both countries aim to reduce their reliance on Russian-controlled routes while leveraging Pakistan’s ports to boost regional trade. Political analyst Zhanat Momynkulov warns that the conflict could disrupt supply chains and raise the cost of goods across South and Central Asia. The rerouting of flights due to Pakistani airspace closures is already affecting logistics and regional connectivity. Kazakhstan, a central player in both the Shanghai Cooperation Organization and the Belt and Road Initiative (BRI), is particularly vulnerable. Projects...

Trump's Tariffs

Kazakhstan Takes the Initiative: Delegation Planning to Head to U.S. to Tackle Trump Tariffs

Deputy Minister of Trade and Integration Zhanel Kushukova has announced Kazakhstan's decision to send a high-level delegation to the United States for consultations on import duties, marking a proactive step to address trade challenges and strengthen economic ties. This move comes amid heightened tensions in global trade after sweeping tariffs were unveiled by U.S. President Donald Trump, including a significant 27% duty on Kazakh goods. The delegation aims to foster dialogue on reducing trade barriers, advocate for the equitable treatment of exports, and explore exceptions for certain goods. No date has been set for the visit yet. The decision demonstrates Kazakhstan's commitment to bolstering its position as a key player in international trade. The targeted discussion will focus on sensitive issues, including tariffs impacting industries such as crude oil, uranium, silver, and ferroalloys, which, as noted by the Ministry of Trade and Integration, “constitute 92% of total exports.” As previously reported by The Times of Central Asia, while these goods might qualify for exemptions under U.S. regulations, the higher tariff symbolizes a broader challenge for Kazakhstan in its response to navigating the evolving trade landscape. Context of Trump's Tariff Policy The 27% tariff imposed on Kazakhstan stands out as by far the highest targeting Central Asia, where neighboring Uzbekistan, Turkmenistan, Tajikistan, and Kyrgyzstan will face a 10% baseline duty. Billed as addressing trade imbalances and protecting U.S. industries – though the methodology behind the administration’s calculations has baffled many analysts - Trump's tariff regime has introduced a layered system targeting a raft of nations. While China has been hit hardest, with seemingly ever-increasing duties now standing at a dizzying 145%, even smaller economies such as impoverished Cambodia (49%) and Laos (48%) have been caught in the crossfire, raising concerns about disproportionate impacts on developing nations. While Trump stepped back from the brink on April 9, announcing a 90 day pause for the majority of countries before doubling down on China, companies such as Apple - the world’s most valuable publicly listed company – had already experienced a fall in market capitalization of more than $300 billion on the day after the policy was announced, its’ worst single-day drop since 2020. Amidst a slump in markets globally, meanwhile, U.S. Federal Reserve chair, Jerome Powell, has warned that Trump’s tariffs will hit the U.S. economy and lead to rising prices. Economists have noted the potential ripple effects of tariffs on global markets, with fears of supply chain disruptions and stagflation growing. For Kazakhstan, a resource-rich economy striving to diversify beyond its traditional oil and mining industries, the heightened duties could dampen its exports while complicating efforts to attract foreign investment. However, analysts such as Rasul Rysmambetov have argued that Kazakhstan’s relatively small share in global trade may shield it from significant fallout, with the tariff largely “symbolic” in nature. Opportunities Amid Challenges Despite these challenges, Kazakhstan is attempting to leverage the situation to advance its diplomatic and economic strategies, with the country’s Ministry of Trade and Integration working to secure specific exemptions...