GDP Forecast - The Times Of Central Asia

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GDP

Why Kazakhstan Is Moving Ahead in GDP Per Capita

The International Monetary Fund has projected Kazakhstan to reach roughly $23,170 in nominal GDP per capita by 2031. On the same current-dollar measure, it is projected to pass China around 2026 and Russia by 2031. The comparison is a milestone, but it requires perspective. It is neither a purchasing-power verdict nor a comprehensive measure of household welfare. It nevertheless marks Kazakhstan’s entry into a higher income band. The question is how a state that began independence amid post-Soviet economic disruption reached this stage. How Kazakhstan Reached This Point Kazakhstan’s present position rests on a three-decade progression of state capacity, resource development, and institutional learning. When the Soviet Union collapsed, the country did not inherit a working growth model. It inherited broken production chains, institutional rupture, and inflation. It therefore faced the task of building a market economy out of an administrative-command system. In current U.S. dollars, GDP per capita stood near $1,400 in 1991, and exceeded $14,000 by 2024; in constant-dollar terms, the gain was smaller but still substantial. Hydrocarbons supplied the base, but political institutions and leadership acumen determined how much of that base could survive volatility. The path since 1991 has not been smooth. The 1990s brought collapse and stabilization. The 2000s brought hydrocarbon acceleration, foreign direct investment, and a rise in nominal GDP per capita climbing from a little more than $1,000 in 2000 to more than $8,000 in 2008. The global financial crisis interrupted the rise without destroying the model. The early 2010s brought recovery. The 2014–2016 oil-price and exchange-rate shock then tested the foundations already built, as the current-dollar figure fell sharply while real output per person proved more stable. COVID imposed another interruption. The post-2020 rebound belongs to that sequence. The Tokayev agenda belongs to this third stage of institutional learning. It did not create the GDP per capita trajectory over three decades, but today the issue has shifted from accumulation to stewardship. The inherited growth model had to be made more competitive, more rules-based, more socially visible, and more sustainable. Since 2022, the government has treated de-monopolization, asset recovery, social investment, and private-sector development as connected elements of the same governing effort. The IMF’s latest assessment shows the pressure inside that effort: growth remains strong, supported by oil output and non-oil activity, while fiscal, inflationary, and quasi-state-sector pressures still require correction. The Reform Program and Its Results Decree No. 542, signed in May 2024, set out measures to liberalize the economy, limit expansion of the quasi-state sector, revise privatization criteria, strengthen competition, and improve conditions for entrepreneurship. Its operative terms are competition, privatization, reduced state participation, and lower business costs. The decree temporarily halts the creation of new quasi-state entities and provides for an audit of state and quasi-state assets, partly to identify candidates for privatization. It also incorporates reforms affecting procurement and business regulation. The decree seeks to bend Kazakhstan’s accumulated macroeconomic trajectory toward commercial governance. The challenge is not to remove state capacity but to prevent it from crowding out private...

Economy

Uzbekistan’s Economy to Remain Strong in 2026, IMF Forecasts 6.8% Growth

The International Monetary Fund (IMF) has released its latest assessment of Uzbekistan’s economy, reporting strong growth in 2025 alongside recommendations for continued fiscal discipline and structural reforms. According to the IMF, Uzbekistan’s real GDP grew by 7.7% in 2025, driven by robust domestic consumption and investment. Growth was broad-based, with the services and construction sectors expanding the fastest. At the same time, the unemployment rate declined to 4.8%, down 0.7 percentage points from the previous year. Inflation showed a downward trend, with annual consumer price growth falling to 7.3% by the end of 2025, compared to 9.8% a year earlier. The IMF attributed this to the fading impact of energy price increases introduced in May 2024, a stronger national currency, and what it described as an “appropriately tight monetary policy stance.” Core inflation also declined over the same period. External balances improved. The current account deficit narrowed to 3.9% of GDP, supported by strong exports and remittance inflows. International reserves remained stable, covering around 13 months of imports, while the fiscal deficit fell to 2.1% of GDP, below the government’s 3% target. “The economic outlook remains favorable,” the IMF said, while pointing to increasing global uncertainties, particularly linked to geopolitical tensions and the conflict in the Middle East. Economic growth is projected at 6.8% in 2026, before moderating to around 6% in 2027. Inflation is expected to remain above the Central Bank’s 5% target in 2026, partly due to higher global oil prices, before easing toward the target level in 2027. The IMF stressed that monetary policy should remain focused on price stability, noting that the policy rate has been held at 14% since March 2025. The report also highlighted risks related to global economic conditions, including trade disruptions and commodity price volatility, as well as domestic challenges such as potential pressure for increased public spending and vulnerabilities linked to state-owned enterprises. The IMF recommended limiting additional government spending in 2026 to avoid fuelling inflation. It also called for targeted social support measures instead of broad subsidies, alongside continued reforms in tax policy, public financial management, and state-owned enterprises. Further recommendations included accelerating the privatisation of state-owned banks, strengthening financial sector oversight, and improving governance standards. The IMF also emphasised the importance of maintaining exchange rate flexibility to help the economy absorb external shocks. The findings build on last year’s IMF assessment, which reported 7.6% growth in the first nine months of 2025, also driven by strong consumption and investment, while inflation showed signs of easing.

Climate Change

Central Asia’s Climate Risks Could Cost Up to 130% of GDP by 2080

By 2080, climate change is expected to have a profound impact on the economies of Central Asian countries, with potential losses ranging from 20% to 130% of GDP. The most severe effects are projected for mountainous nations. These estimates were presented at a CAREC technology forum by Iskandar Abdullaev, a senior research fellow at the International Water Management Institute in Uzbekistan. According to Abdullaev, climate change is no longer solely an environmental issue but an increasingly significant economic factor. Key risks include droughts and water scarcity, floods, heatwaves, and glacier melt. The projected economic impact varies across the region. Tajikistan could face losses of between 80% and 130% of GDP, Kyrgyzstan 70% to 120%, Kazakhstan 40% to 80%, Uzbekistan 30% to 45%, and Turkmenistan 20% to 60%. Abdullaev emphasized that mountainous countries – Tajikistan and Kyrgyzstan – are particularly vulnerable, as climate change directly affects water resources. Glacier melt reduces river flows, creating challenges for both energy production and water supply. Droughts and extreme heat are already placing pressure on agriculture, with declining crop yields and reduced pasture productivity. Without adaptation measures, the region’s long-term sustainability could be at risk. Experts stress that mitigation and adaptation efforts are essential to reduce these risks. These include modernizing irrigation systems, adopting climate-resilient agricultural technologies, and expanding renewable energy capacity. This is not the only warning. According to the World Bank, natural disasters are already causing significant economic damage in Central Asia. Losses from extreme events, including floods and earthquakes, can reach up to 6% of GDP, with earthquakes alone accounting for up to $2 billion in damages. At the same time, countries in the region face substantial financing gaps following major disasters. In Tajikistan, this gap could reach up to $1.5 billion. Experts warn that climate change is likely to intensify these risks, further increasing the economic burden on the region.

GDP Forecast

S&P Global Ratings Expects Kazakhstan’s GDP Growth to Slow in 2026

The international rating agency S&P Global Ratings has affirmed Kazakhstan’s long-term sovereign credit rating at BBB- and its short-term rating at A-3, while maintaining a positive outlook on the long-term rating. At the same time, S&P analysts expect economic growth to decelerate in 2026 and warn of persistently high inflation. According to commentary on S&P’s projections by analysts at the Halyk Finance research center, Kazakhstan’s GDP growth is forecast to slow to 4.1% in 2026. The projected slowdown is attributed to a 4% decline in oil production, weaker fiscal stimulus, and reduced consumer activity amid higher taxes and tighter credit conditions. In the medium term, for 2028-2029, S&P expects GDP growth to remain at around 4% or slightly higher. However, risks persist, particularly those related to geopolitical tensions and the continued sensitivity of Kazakhstan’s budget revenues and exports to fluctuations in global oil prices. For comparison, Kazakhstan’s GDP grew by 6.5% in 2025. In 2026, the government expects growth of 6.2%, a notably more optimistic projection than S&P’s estimate. Other international institutions have offered varying forecasts. The European Bank for Reconstruction and Development (EBRD) recently upgraded its 2026 GDP growth forecast for Kazakhstan to 4.7%, up from 4.5%. In contrast, the International Monetary Fund (IMF) in January lowered its 2026 growth forecast by 0.4 percentage points to 4.4%. Returning to S&P’s projections, the agency expects inflation to reach 11% by the end of 2026 and forecasts an exchange rate of 540 tenge per $1. Halyk Finance analysts stated that they broadly agree with S&P’s GDP and inflation forecasts. However, they consider the risks of further weakening of the national currency to be greater than the agency anticipates. According to their estimates, the exchange rate in 2026 could depreciate to 580-590 tenge per $1. S&P also expects the Kazakh government to continue fiscal consolidation in the medium term by expanding the tax base and tightening control over public spending, while preserving substantial liquid reserves. Over the next three years, the government does not plan to withdraw additional funds from the National Fund through targeted transfers or bond placements. The guaranteed annual transfer from the National Fund is set at $5.5 billion, half the $11.1 billion withdrawn in 2025. “We share S&P Global Ratings’ positive assessment, provided that the government strictly adheres to its fiscal consolidation commitments and reduces transfers from the National Fund,” Halyk Finance concluded. The Times of Central Asia previously reported that the IMF believes Kazakhstan’s current GDP growth rate exceeds the country’s long-term economic potential, thereby increasing inflationary pressures and signaling potential overheating of the economy.

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.

Economic Growth

ACRA Raises Kazakhstan Economic Growth Forecast

The Analytical Credit Rating Agency (ACRA) has released its updated forecast for Kazakhstan’s economy for 2026-2028, projecting annual growth of 5.3-5.9%. These figures exceed the government’s recent targets. According to the published report, the next three years will mark a period of accelerated expansion, driven by industry and construction, alongside strengthening value chains in services and agribusiness. The government's earlier forecast projected GDP growth of 5.4% in 2026, followed by stabilization at 5.3%. While ACRA offers a more optimistic outlook, it notes that achieving the targeted 6% growth will require a sharp increase in investment activity and a boost in foreign exchange earnings from exports. The agency also warns that accelerating growth may carry the risk of economic overheating and a new wave of inflation. Investment remains the weak link in Kazakhstan’s growth model. From 2021 to 2025, investment accounted for only 15% of GDP, significantly lower than in comparable economies and previous periods of rapid expansion. For example, during 2010-2014, investment levels held at 18%, and in earlier years, they reached as high as 20-22%. Without restoring higher investment levels, sustaining growth above 5.5% could prove difficult. Inflation risks also remain elevated. Contributing factors include household inflation expectations, imported inflation from neighboring countries, accelerated lending, and rising global food prices. Nevertheless, ACRA forecasts inflation to decline from 11.8% in 2025 to 8% in 2026, 6.2% in 2027, and 5.1% in 2028. The tenge is expected to gradually weaken to 555 per $ in 2026, 574 in 2027, and 594 in 2028. ACRA highlights three major risks over the next three years. The first is export and logistics vulnerabilities. Kazakhstan’s primary oil export route continues to run through Novorossiysk, and any disruption along this corridor would quickly impact the current account and put downward pressure on the tenge. The second risk concerns fiscal discipline. Rising expenditures are increasing reliance on transfers from the National Fund, which could reignite inflationary pressures if not managed prudently. The third is the depreciation of the Russian ruble. A weaker ruble boosts imports, reduces exports, and worsens Kazakhstan’s trade balance. While ACRA considers the likelihood of these risks occurring simultaneously to be low, their combined impact could seriously challenge Kazakhstan’s growth outlook. As previously reported by The Times of Central Asia, President Kassym-Jomart Tokayev expects Kazakhstan’s GDP to grow by 6% in 2025, surpassing the $300 billion threshold for the first time.