Economy - The Times Of Central Asia

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Central Asia Poised to Outpace Global Growth in 2025, IMF Projects (With One Exception)

The year 2025 is anticipated to bring moderate growth for the global economy, according to forecasts by the International Monetary Fund (IMF). Global GDP is projected to grow by 3.2%, reaching $115.3 trillion at current prices. While global growth is expected to remain stable, it is weaker than initially forecast. The IMF notes that the economic outlook for the United States has improved, but growth expectations for other advanced economies, particularly in Europe, have been downgraded. Emerging markets and developing economies continue to grapple with a range of challenges, including production disruptions, shipping delays, geopolitical conflicts, civil unrest, and extreme weather events. These factors have tempered growth prospects in regions such as the Middle East, Central Asia, and sub-Saharan Africa. In contrast, emerging Asia is experiencing robust growth, fueled by strong demand for semiconductors and electronics, underpinned by substantial investments in artificial intelligence. Additionally, public investment in China and India is driving regional economic expansion. However, the IMF forecasts that global growth will average 3.1% annually over the next five years, a pace slower than pre-pandemic levels. Global Economic Highlights In 2025, the United States is expected to retain its position as the world’s largest economy, with a GDP of $30.3 trillion at current prices. China will follow with $19.5 trillion, while Germany is projected to rank third at $4.9 trillion. Japan and India will occupy fourth and fifth places, with GDPs of $4.4 trillion and $4.3 trillion, respectively. Central Asia Outlook In Central Asia, Uzbekistan’s economy is forecast to expand by 5.7%, reaching $127.4 billion at current prices, according to the IMF. This growth rate positions Uzbekistan as one of the region’s fastest-growing economies. Kazakhstan, the largest economy in Central Asia, is expected to achieve 4.6% growth, with GDP reaching $306.6 billion. Kyrgyzstan’s GDP is forecast to grow by 5%, reaching $17.3 billion at current prices. Tajikistan’s economy is expected to grow by 4.5%, with GDP projected at $14.1 billion. Turkmenistan is forecast to experience slower growth, with its GDP increasing by 2.3% to reach $91.1 billion.

Shortages Gas & Electricity Government Economy

Uzbekistan’s Gas Shortage Forces Residents to Use Coal, Firewood, and Dung

Despite Uzbekistan’s abundant natural gas reserves, many residents are turning to coal, firewood, and even dung for heating, leading to significant environmental problems, according to a report by Radio Azattyk. Experts warn of worsening air pollution and other ecological consequences, as highlighted by the International Energy Agency, while the government plans to expand coal use. Energy officials claim gas production exceeds domestic demand by threefold. However, production has been in decline for five consecutive years. Today, many households rely on coal and other alternatives for heating and cooking, while power plants that once operated on gas are transitioning to coal. According to the World Bank, in 2019, air pollution from fine particulate matter (PM2.5) led to 89 deaths per 100,000 people in Uzbekistan. Environmentalists argue that the increased reliance on coal accelerates climate change, while illegal tree cutting exacerbates ecological damage. Residents blame the government for failing to provide effective alternatives, a problem that worsens during the winter months. “In the city center, the gas pressure in the pipes is so low in winter that the stoves don’t warm. People are forced to burn coal, manure, and even fruit trees,” said Ferghana-based activist Abdusalom Ergashev. In response to widespread deforestation, the government has tightened regulations, with fines for illegal tree felling now reaching 17 million UZS (USD $1,300). Additionally, violators must plant 100 saplings for every tree cut down. In rural areas, families prepare for winter by collecting firewood, drying dung, and purchasing coal. The average household burns approximately 1.5 tons of coal per season, supplemented by cotton stalks, wood, and nut shells. Environmental consequences are becoming increasingly visible. In one video, popular blogger Akmal Isomiddinov highlighted the suffocating smog enveloping Ferghana, a phenomenon occurring across much of the country. Uzbekistan ranks among the leading nations in natural gas reserves, with an estimated 1.8 trillion cubic meters. However, its fields are depleting, and new developments require advanced technologies. Gas production in the first 10 months of 2024 totaled nearly 39 billion cubic meters, a 4.8% decline year-on-year. By comparison, production peaked at 61.6 billion cubic meters in 2018, dropping to 46.7 billion cubic meters in 2023. The government has set a goal to increase production by 33% and return to 2018 levels by 2030. Meanwhile, coal production continues to rise. From less than 4 million tons in 2016, output reached 6.5 million tons in 2023, with plans to increase production to 10 million tons by 2025. Thousands of schools, kindergartens, and hospitals were ordered to switch from gas to coal in 2023. Despite these challenges, the government asserts it is taking steps to combat climate change, including investing in green energy, providing subsidies for electric vehicles, and planting 200 million trees as part of a national campaign.

Economy Foreign Investment State Budget Investment Prospects International investment

Central Asia Attracted $24.8 billion in Investments in 2024

Despite global economic challenges, Central Asia has experienced growth in attracting foreign direct investment (FDI). According to the United Nations Economic and Social Commission for Asia and the Pacific (ESCAP), investment in the region increased by 27%, reaching $24.8 billion in 2024. Kazakhstan and Uzbekistan have become the main centers of attraction for capital, offering investors significant opportunities in the energy sector and green technologies. Uzbekistan attracted $4 billion in foreign investment, reflecting a 49% year-on-year decline. However, the country is actively developing sustainable environmental projects. South Korea’s Western Power plans to build a $152 million biofuel plant in Fergana region. The plant will process cotton stalks to heat greenhouses, which will replace coal and reduce emissions by 120,000 tons of CO2 over 10 years. This project reflects Uzbekistan's policy of reducing dependence on fossil fuels and introducing “green” technologies. Kazakhstan maintained its position as the regional leader in attracting investment, accounting for 63% of Central Asia's total FDI. The country increased its investment inflow by 88%, reaching $15.7 billion. An important role was played by Qatari company UCC Holding, which invested $11 billion in the construction of two gas processing plants, a compressor station, and new main gas pipelines. These projects strengthen Kazakhstan's role as a key energy hub in the region. Kyrgyzstan recorded the highest relative growth in investment, increasing by 310% to $2.1 billion. Turkmenistan and Tajikistan received $339 million and $281 million, respectively. As for outgoing investments, their volume from the region decreased by 58% to $2.3 billion. Russia remains the primary source of outgoing investments, accounting for 90% ($2.1 billion). Georgia invested $105 million, Azerbaijan $76 million, and Kazakhstan $47 million.

Socio-Economic Development Economic Growth Government Strategy Economy

Rahmon Unveils Tajikistan’s Roadmap for Economic Growth and Diplomacy

On December 28, Tajikistan’s President Emomali Rahmon delivered his annual address, titled “On Major Dimensions of Tajikistan’s Domestic and Foreign Policy,” during a joint session of both chambers of the Tajik Parliament. The president outlined key priorities for implementing domestic and foreign policy and advancing various sectors of Tajikistan's economy, including industry, energy, agriculture, transport, investment, entrepreneurship, education, science, healthcare, and social protection. Rahmon directed the government to draft a "Medium-Term Development Program for 2026-2030" by the end of 2025. Highlighting the need for innovation, he proposed declaring 2025-2030 the “Years of Development of the Digital Economy and Innovation.” Additionally, he announced plans to establish a University of Innovation and Digital Technologies in Kulob, building upon the existing Institute of Technology and Innovation Management. Rahmon noted significant progress in industrialization, with Tajikistan’s industrial production nearly doubling in the past five years. This growth included the creation of more than 2,040 industrial enterprises and 74,000 jobs. In the road and transport sector, Rahmon underscored the importance of transforming Tajikistan into a transit hub. Ongoing modernization and reconstruction efforts have already improved the country’s ranking in the World Economic Forum’s road quality index, rising from 50th to 44th among 165 countries. Rahmon highlighted that 43% of Tajikistan's 2024 state budget is allocated to the social sector. Over the past five years, public-sector wages have increased four times, doubling overall during this period. He instructed the government to further raise salaries for employees in education, healthcare, social protection, culture, sports, government agencies, law enforcement, and the military. Employment remains a strategic priority. Rahmon noted that 4.1 million jobs have been created since independence, and he directed regional and local authorities to generate an additional 1.4 million jobs across all sectors of the economy in the next five years. On foreign policy, Rahmon reiterated Tajikistan’s commitment to its “open doors” approach, expressing readiness to strengthen bilateral and multilateral relations. He emphasized the importance of constructive engagement with international and regional organizations, including the United Nations, international financial institutions, and development partners. Rahmon’s address outlined a comprehensive roadmap for Tajikistan’s development, combining innovation, infrastructure, and social investment with an open and cooperative foreign policy. His directives reflect a vision aimed at fostering economic growth, improving living standards, and enhancing the country's position on the global stage.

Ministries Reshuffle Economy

Kazakh President Picks New Economy Minister Amid Reforms, Uncertainty

Kazakh President Kassym-Jomart Tokayev replaced the economy minister on Saturday, a move that came as Kazakhstan struggles with a depreciating currency even though it earned international praise for economic prudence in recent months. The Cabinet change also comes ahead of the January inauguration of U.S. President-elect Donald Trump, who has warned of more tariffs in his second term. Nurlan Baibazarov, who was appointed as deputy prime minister and national economy minister in February, was replaced by Serik Zhumangarin, an experienced hand whose previous posts included deputy economy minister, trade minister and head of Kazakhstan’s Agency for Protection and Development of Competition. He was also among the several deputy prime ministers in the Cabinet and retains that title as well. Zhumangarin was tasked in his new job with ensuring Kazakhstan’s economic growth, implementing structural changes and improving budget and tax policies, according to the prime minister’s office. “In addition, the Ministry of National Economy needs to pursue a balanced policy of business support and a balanced policy of tariff regulation in order to ensure economic growth in priority sectors,” the office said. While global economic policy-makers are preparing for uncertainty over planned tariffs and other measures when Trump takes office, the president-elect and Tokayev agreed in a telephone conversation this month to collaborate on trade, investment and other areas. In September, the Moody's Ratings agency upgraded Kazakhstan's long-term local and foreign currency issuer ratings to Baa1 from Baa2 and changed the outlook to stable from positive. Moody’s applauded institutional and economic reforms in Kazakhstan, as well as efforts to diversify and move away from hydrocarbons, but warned of the risk of geopolitical tensions and “secondary” sanctions related to Western economic pressure on Russia because of the war in Ukraine. In October, the International Monetary Fund predicted GDP growth in Kazakhstan of 3.9% for 2024, with growth expected to increase in 2025 despite uncertainty. It applauded what it called Kazakhstan’s tight monetary policy and commitment to exchange rate flexibility. Even so, Kazakhstan’s currency later came under increased pressure. The central bank said early this month that it had spent more than $1 billion in foreign exchange interventions since mid-November in an effort to stabilize the declining currency, which passed the threshold of 500 tenge to the U.S. dollar and hit record lows. Kazakh officials attributed the drop to the global appreciation of the dollar, a decrease in oil prices, the falling Russian ruble and other factors. Born in 1969 in Aktobe, Kazakhstan, Zhumangarin, the new economy minister, has also worked on competition and antitrust regulation for the Eurasian Economic Commission, a regulatory body that oversees the Eurasian Economic Union. The group aims at integrating the economies of the former Soviet states of Kazakhstan, Kyrgyzstan, Russia, Armenia and Belarus.

Regional Security Ecology Environmental Awareness Economy Regional Development

Central Asia Faces Devastating $9 Billion Annual Loss from Climate Crises

Central Asia faces a complex mix of development challenges, according to a study conducted by the Analytical Credit Rating Agency (ACRA). These include global issues such as climate change, rising inequality, and demographic shifts, alongside regional concerns like water crises, aging infrastructure, border conflicts, and lack of access to sea routes. The region’s challenges can be categorized into external and internal risks. Since gaining independence, Central Asia has been shaped by the influence of global powers. Trade, security, energy, and education ties with Russia remain strong, while China’s Belt and Road Initiative has led to significant investment in infrastructure. Western nations and multinational corporations are active primarily in the raw materials sector, particularly in Kazakhstan, Uzbekistan, and Turkmenistan. While these international connections drive economic growth, they also heighten the region’s vulnerability to global shocks. For example, heavy reliance on remittances from migrant workers and low export diversification increase economic fragility. Climate change poses one of the most pressing threats to the region. Natural disasters—including floods, which affect about one million people annually, and earthquakes, impacting two million - result in $9 billion in annual GDP losses. Rising temperatures are expected to exacerbate issues such as water scarcity, droughts, heat waves, and the loss of agricultural land. Adopting sustainable development practices and green technologies could help mitigate these effects. Aging water and energy infrastructure is a major hurdle for the region. Energy insecurity, compounded by climate change, limits economic potential. Despite a rise in foreign investment from $1.5 billion in 2000 to $7.4 billion in 2023, the majority of funds are concentrated in raw materials, with only a small share allocated to infrastructure improvements. Transport development is equally critical. The lack of sea access places Central Asia at a 20% developmental disadvantage compared to coastal nations. Expanding roads, railways, and logistics hubs could significantly enhance regional and international trade. Territorial disputes, particularly around enclaves, remain a source of periodic clashes, with the Kyrgyz-Tajik border clashes of 2022 being a notable example. While these conflicts may not immediately affect economic stability, escalations could damage the region’s investment climate and trade prospects. A peace agreement signed later in 2022 has helped to stabilize the situation. Additionally, the situation in Afghanistan continues to present challenges, including terrorism, refugee flows, and border security concerns. These risks intensified following the regime change in Afghanistan in 2021, increasing the urgency for stronger border controls. Addressing these interconnected challenges will require coordinated efforts among all Central Asian nations. International organizations and major global partners must also play a role by supporting infrastructure and technological modernization. Such collaboration is essential to mitigating economic risks and fostering long-term development in the region.