Eurasian Development Bank (EDB) - The Times Of Central Asia

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Eurasian Development Bank (EDB)

EDB to Provide Tajikistan With $18.5 Million for Road Construction in Gorno-Badakhshan

The Eurasian Development Bank (EDB) will finance the construction of a section of the Labidjar-Kalaikhumb highway in Tajikistan in a project aimed at improving transport connections with the country’s remote Gorno-Badakhshan Autonomous Region (GBAO) and increasing access to mountainous areas. The financing agreement was signed by the EDB’s country director for Tajikistan, Vladimir Yakunin, and Tajik Finance Minister Fayziddin Kakhhorzoda. Under the agreement, the bank will provide Tajikistan with concessional financing totaling $18.5 million. Of that amount, $17 million will be issued as a loan, while an additional $1.5 million will be allocated as a targeted grant. The funds will be used for the construction and reconstruction of the first section of the Labidjar-Kalaikhumb road. The project includes the construction of ten kilometers of roadway and three bridges. Project developers say the new infrastructure will improve cargo transport safety, enhance access to remote mountain regions, and create additional opportunities for business development and trade. The project is also expected to strengthen transport links between Tajikistan’s centrally administered districts and the Gorno-Badakhshan Autonomous Region. “The project will become part of a broader effort to modernize Tajikistan’s transport infrastructure and will contribute to the country’s socio-economic development, the expansion of interregional ties, and increased population mobility,” Yakunin said. He added that support for infrastructure projects remains one of the bank’s key strategic priorities. The Eurasian Development Bank has operated across the Eurasian region for nearly two decades. The institution finances projects in transport, digital infrastructure, agriculture, industry, and green energy. According to the bank, by the end of 2025, its portfolio included 326 projects with a combined investment volume of approximately $19.6 billion. A significant share of those projects is linked to the development of transport corridors and deeper economic integration among participating countries. The EDB also states that its activities are guided by the United Nations Sustainable Development Goals and ESG principles.

Trade

EDB: Central Asian Trade Has Doubled in Five Years

Mutual trade between Central Asian countries reached $12.3 billion in 2025, nearly doubling compared to 2020, according to analysts at the Eurasian Development Bank (EDB). The figure underlines how Central Asia is increasingly emerging as a more interconnected regional market after years of relatively limited internal trade links following the collapse of the Soviet Union. Kazakhstan remains the largest participant in regional trade, accounting for 54% of all intraregional exports, valued at $6.6 billion. The country's key export commodities to the region include grain products (18%), ferrous metals (13%), crude oil and petroleum products (8%), sunflower oil (7%), and beverages (3%). The primary destination for these exports is Uzbekistan, while Kyrgyzstan recorded the fastest growth in imports from Kazakhstan, with volumes nearly tripling to $1.7 billion. Uzbekistan ranks second, accounting for 26% of regional exports, worth $3.2 billion. The largest increase in Uzbek exports was recorded in trade with Kazakhstan, where shipments grew 2.1 times. Uzbekistan’s main export products include motor vehicles and auto parts (14%), fruit and vegetables (11%), plastic products (5%), fertilizers (4%), and clothing (3%). Between them, the two largest Central Asian economies represent nearly $10 billion of exports to their neighbours, representing almost 80% of regional trade. Turkmenistan's share of exports – primarily natural gas – rose to 11%, while Kyrgyzstan's $0.9 billion of exports (half of which was unprocessed precious metals and coal) represented 7%. Tajikistan was the smallest contributor, accounting for just 3% of intraregional exports – principally zinc, lead and copper. According to EDB analysts, the rapid expansion of trade has been driven by strengthening bilateral economic cooperation among Central Asian states and efforts to simplify trade procedures. The bank said the pace of growth demonstrates that Central Asia is gradually emerging as an increasingly integrated regional market with strengthening internal economic ties. That said, analysts stressed that the current level of trade still represents only a fraction of the region’s broader economic potential. Further reductions in trade barriers, improved transport connectivity, and deeper industrial cooperation could significantly accelerate intraregional trade turnover, the report said. EDB analysts estimate that trade between Central Asian countries could increase by an additional $4 billion by 2029.

Economic Growth

Why Strong Economic Growth in Central Asia Masks Underlying Risks

Central Asian countries are significantly outperforming the global average in GDP growth, largely due to differing economic models across the region. However, rapid expansion does not remove deep structural vulnerabilities. As early as March, data showed that the combined economies of Central Asian countries grew by nearly 7% in 2025 compared to the previous year. The World Bank estimates regional growth at 6.2%, while the Eurasian Development Bank (EDB) places it at 6.6%. These calculations include Kazakhstan, Uzbekistan, Kyrgyzstan, and Tajikistan; Turkmenistan is excluded due to limited statistical transparency. By comparison, growth rates in advanced economies are much lower. The EDB expects around 1.6% growth in the U.S. and approximately 1.1% in the eurozone in 2026, while China’s economy is projected to expand by about 4.6%. Nevertheless, experts note that the region’s economic outlook remains complicated by high inflation, income inequality, and continued dependence on external factors. Investment activity and domestic demand have been the key drivers of growth, according to the EDB. Kazakhstan recorded its highest growth in 13 years (6.5%), with industry leading the expansion: mining grew by 9.4% and manufacturing by 6.4%. In 2026, the non-resource sector is expected to play a greater role. Kyrgyzstan has led the region in GDP growth for the third consecutive year: GDP grew by 11.1% in 2025 and by 9% in January 2026. In Uzbekistan, GDP increased by 7.7% in 2025 (up from 6.7% a year earlier), supported by investment, trade, services, and construction. Tajikistan’s GDP rose by 8.4% in 2025, matching the previous year’s performance. Growth continues to be driven by expanding industrial production and strong domestic demand. Early 2026 data suggest this momentum is holding. Uzbekistan’s Record In April, the World Bank highlighted Uzbekistan’s resilience to external challenges and strong growth dynamics. According to its updated report, the country’s 2025 GDP growth was revised upward by 1.5 percentage points to 7.7%. The outlook is 6.4% for 2026 and 6.7% for 2027. Key drivers include high global gold prices, investment inflows, expanded lending, and ongoing structural reforms. Rising household incomes have also played an important role, supported by remittances, which increased by 37% last year to reach $18.9 billion. By the end of 2025, Uzbekistan ranked among the fastest-growing economies in developing countries in Europe and Central Asia, alongside Kyrgyzstan and Tajikistan. The region as a whole is experiencing its highest growth rates in 14 years. At the same time, analysts point to persistent structural constraints, including a large public sector and the dominance of state-owned enterprises, which hinder private sector development. External risks, including geopolitical instability and potential disruptions in energy and fertilizer supplies, remain significant. In 2025, Uzbekistan’s GDP exceeded €133 billion, compared to approximately €56 billion nine years earlier. Over the same period, GDP per capita rose from about €1,750 to around €3,220, nearly doubling average income levels. Investment in fixed capital increased by more than 15% year-on-year in 2025, while export value grew by over 33%. Persistently high global gold prices played a major role: export...

Demographics

Central Asia’s Population Could Reach 96 Million by 2040, Raising Infrastructure Pressures

Central Asia’s population could grow to 96 million by 2040, a trend expected to stimulate economic expansion while placing significant strain on infrastructure, energy systems, and water resources across the region, according to Russia’s state news agency TASS. In an interview with TASS, Nikolai Podguzov, Chairman of the Management Board of the Eurasian Development Bank (EDB), said demographic growth would be one of the defining factors shaping Central Asia’s long-term development. “By 2040, according to our estimates, the population of Central Asia may reach 96 million. This should become a driver of economic growth, but at the same time such numbers will create enormous pressure on infrastructure,” he said. As previously reported by The Times of Central Asia, Central Asia’s population exceeded 84 million in 2025, continuing a rapid upward trend after surpassing 80 million in 2024. Projections indicate that the population could exceed 100 million by 2050, underscoring the scale of demographic and economic transformation facing the region in the coming decades. Podguzov added that the region would require significant progress in energy efficiency, modern transport systems, and water management to ensure sustainable development. He described Central Asia as one of the regions of the world most vulnerable to climate change. According to EDB forecasts, water shortages are expected to intensify, with an annual deficit potentially reaching between 5 and 12 cubic kilometers by 2028. A substantial portion of water resources is already lost due to outdated irrigation and distribution systems. Podguzov said the bank is financing projects to modernize irrigation networks, introduce water-saving technologies, and implement digital water accounting mechanisms across the region. To address these challenges, the EDB has proposed a Eurasian Transport Framework, a network of transport corridors aimed at lowering logistics costs and accelerating trade flows. While existing routes predominantly run east to west, Podguzov emphasized the growing importance of north-south connections, including the potential Trans-Afghan corridor, which could provide access to markets in South Asia and the Persian Gulf. The bank projects that the combined economies of Central Asia’s five countries will reach approximately $600 billion in 2026, positioning the region among the fastest-growing globally. However, Podguzov stressed that demographic expansion, transport development, and water security are closely interconnected challenges that require coordinated policy responses.

Investments

Uzbekistan and Kazakhstan Emerge as Top Investment Destinations in Eurasian Region

A new report from the Eurasian Development Bank (EDB) highlights a significant shift in investment flows within the Eurasian region, with Central Asia, particularly Uzbekistan and Kazakhstan, emerging as the primary recipients of foreign direct investment (FDI). Titled Investment Cooperation in the Eurasian Region Based on EDB Monitoring of Mutual Investments, the report provides a detailed analysis of mutual FDI trends across former Soviet republics (excluding the Baltic states) and Mongolia. Despite a global downturn in FDI, investment activity across the Eurasian region continues to grow. As of the first half of 2025, mutual FDI between member countries reached a record $48.4 billion, with private businesses driving the majority of the growth. Kazakhstan and Uzbekistan Take the Lead Kazakhstan has become a central player in regional investment. The country’s outbound investments total $3.25 billion, while inbound investments stand at $9.4 billion, accounting for 19.5% of all mutual FDI in the region. Notably, Kazakhstan’s investment in neighboring Uzbekistan rose by 60% over the past 18 months, driven primarily by construction projects. Uzbekistan is now the largest recipient of FDI in the Eurasian region, attracting over $10.7 billion in inbound investment, 22.3% of the regional total. The country also doubled its outbound investment in 2025 compared with the previous year, reaching $396 million. Uzbek companies invested heavily in manufacturing, which made up 85% of their foreign investment activity. Russia remains Uzbekistan’s largest investor, accounting for 90% of the total. Intra-Regional Investment on the Rise Intra-regional investment in Central Asia reached $1.3 billion in the first half of 2025, a 42% increase compared to 2023 and nearly triple the volume recorded in 2016. Kazakhstan remains the largest regional capital exporter, while Uzbekistan continues to lead as the main recipient. Roughly 80% of these intra-regional investments are concentrated in the construction, manufacturing, and financial sectors. Other Central Asian Economies Also Attract Investment Kyrgyzstan recorded $2.4 billion in incoming FDI, up 21% from 2023. The increase was largely driven by investments in manufacturing and energy. Tajikistan also saw modest growth, with mutual FDI from Eurasian countries reaching $530 million by mid-2025, up 3% compared to 2023. Russian investment continues to dominate, comprising 93% of the total and focusing on energy, telecommunications, and financial services.

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.