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Central Asian Economies to See Continued Growth in 2024 and 2025

The latest economic outlooks from the European Bank for Reconstruction and Development (EBRD) and Asian Development Bank (ADB) project continued economic growth in the five Central Asian countries in 2024 and 2025. According to the latest edition of the EBRD’s Regional Economic Prospects report, Kazakhstan’s economy will grow by 4% in 2024, with upside from public spending to restore flood-affected infrastructure and housing. The trade, transport, warehousing, services, and IT sectors were the main growth drivers for Kazakhstan in the first half of the year. The EBRD forecasts that in 2025, the country’s real GDP will likely grow by 5.5% amid the planned expansion of the Tengiz oil field. The Asian Development Bank’s (ADB) Asian Development Outlook (ADO) September 2024 projects 3.6% growth of Kazakhstan’s gross domestic product (GDP) this year, slightly lower than the bank’s previous forecast of 3.8% in April 2024. The reason is a weaker service expansion in the first half of the year, lower oil outputs, massive spring floods, and a slowdown in investment. ADB forecasts Kazakhstan’s economic growth to accelerate to 5.1% in 2025. The government of Kazakhstan anticipates the country’s economic growth at 5.6% in 2025. The EBRD report forecasts Kyrgyzstan’s GDP growth to reach 9% in 2024 before moderating slightly to 7% in 2025. The country’s growth potential stems from the expansion of tourism, investment in infrastructure, and gold exports. Both remittances and real wages have remained elevated, helping retail and wholesale trade grow. ADB projects 6.3% growth for Kyrgyzstan in 2024 and 5.8% in 2025. Kyrgyzstan’s Ministry of Economy forecasts economic growth of 6.3% in 2024 and 6% in 2025. Kyrgyzstan’s Minister of Economy, Daniyar Amangeldiev, has explained why the economic forecasts from international financial institutions sometimes differ from those of the Kyrgyz Ministry of Economy. According to Amangeldiev, the forecasts differ because international financial organizations often do not take into account specific measures and actions that the government plans, each of which would potentially impact the country’s economic growth. He added that international forecasts can be skeptical, based on data that may not reflect all the government's actions. According to the EBRD report, Tajikistan’s GDP growth is projected to reach 8% in 2024 and 7% in 2025. Hikes in public-sector salaries, pensions, and minimum wages drove domestic demand in the year's first half, boosting the retail and wholesale trade sectors. The resumption of precious and semi-precious metal exports increased public infrastructure spending, and fixed capital investment was a major growth factor. However, fluctuations in remittances from Tajik labor migrants working in Russia present a significant downside risk for the Tajik economy. ADB forecasts Tajikistan’s economy to grow 6.5% in 2024 and 2025. The EBRD report says Turkmenistan’s economy has shown stability in recent years, citing investment in public infrastructure projects, production facilities, and fixed capital investment as key growth factors. Launching a new single window for export-import operations has improved Turkmenistan’s customs efficiency and simplified transit procedures, enabling higher freight turnover. This has led to the expansion of the country’s transportation sector. The EBRD forecasts...

Investments Economy Strategy Social GDP Artificial intelligence

Tajikistan Aims to Employ AI to Achieve 5% of GDP by 2040

As previously reported by TCA, Tajikistan is the only Central Asian country with a national strategy for the development of AI. In 2022, President Emomali Rahmon signed off a national strategy to achieve 5% of the GDP from developing artificial intelligence by 2040. On August 1, the Minister of Industry and New Technologies of Tajikistan, Sherali Kabir, announced at a press conference that work had begun in securing the first patent for the artificial intelligence algorithm 'zGAN' , developed by the local research laboratory of Tajikistan, and stated: “At a time when two-thirds of the world’s countries have yet to develop their national AI strategies, these steps highlight Tajikistan’s ambition to take a key position in technology and innovation." Referencing Tajikistan's progress in the field, Azizjon Azimi, chairman of the Council on AI under the Ministry of Industry, said more than 300 experts had been trained in artificial intelligence and its applications in the economy were expanding. "The leading case is using 'zGAN' algorithms for credit scoring. More than 30 banks in over ten countries have already implemented this algorithm by the Tajik fintech zypl.ai, which automatically issued loans worth over $200 million. To date, zypl.ai has attracted more than $3 million in private direct investment in the development of AI in Tajikistan." Azimi emphasized that in addition to the impact of 'zGAN' in the economic sphere, plans are in place for its application in agriculture, industry, and healthcare. He also reiterated that an agreement had been signed to develop AI programs for the Emirate of Ras al-Khaimah based on Tajikistan's national AI development strategy.

GDP Foreign debt Inflation Economy Investments Finance

IMF: Uzbekistan’s Foreign Debt to Decrease by 10% in 2029

According to a new report issued by the International Monetary Fund, in recent years and against uncertainties from the pandemic and Russia’s war in Ukraine, Uzbekistan's rapid growth in economy is set to continue in tandem with a significant decline in poverty. Despite a slowdown in the development of trade partners and the removal of the fiscal stimulus in 2023, a strong economic growth is predicted for this year and supported in the medium term, by the completion of budgetary consolidation, ongoing structural reforms, and continuing capital inflows, demonstrates the government’s commitment to promoting market-oriented reforms to further Uzbekistan’s economic development. Challenges still remain, however, in the large state footprint in the economy and last year’s expansionary fiscal policy, which the authorities determined to persevere in their reform efforts, must address to advance sustainable and inclusive growth. The monetary policy which has reduced inflation must continue until it reaches the Central Bank of Uzbekistan's target. Sustaining a high real policy rate, tight fiscal and macro-prudential policies, and supportive structural reforms would gradually reduce inflation to the target by the end of 2027 and the CBU should stand ready to increase its policy rate if the energy price reform leads to broader price pressures and raises inflation expectations. The government should continue efforts to accelerate the restructuring and privatization of state enterprises, eliminate preferences for state-owned enterprises and unbundle large enterprises to increase competition and improve the business environment. The authorities are accelerating efforts for WTO accession and undertaking measures to bolster external competitiveness and export diversification; opening markets and reducing monopolies would boost growth and help reduce inflation. According to the IMF’s analysis, it will reach 60.1% of GDP at the end of 2024, and the country's total external debt is expected to decrease to 51% of GDP by 2029. Similarly, from 33% of GDP at the end of 2024, government-guaranteed external debt is likely to decline to 27% by 2029. Several factors contribute to these positive statistics. The government of Uzbekistan aims to limit the budget deficit to 3% of GDP by introducing annual limits on the budget deficit and new debts. In addition, the 2023 public debt law limits state-guaranteed debt to 60% of GDP, with proposals for debt reduction if it reaches 50%. As stated in the report, the authorities emphasized their commitment to maintaining a moderate level of debt and noted that the government’s goal of reducing and maintaining the medium-term fiscal deficit at 3% of GDP would send purchasing power parity and external borrowing as a share of GDP downwards

GDP Investments Gold Economy Export/Import

High Gold Prices Keep the Uzbek Economy Afloat

In March this year, Uzbekistan became the largest seller of gold in the world: eleven tons of the strategic asset were sold. This strategy has allowed it to maintain reserves at a time of increasing government debt and state budget deficit. "We have a trade deficit, a budget deficit. Perhaps other exports are not as good as we would like them to be. With high gold prices amid geopolitical instability, there are worse times to sell gold," Yuli Yusupov, an independent Tashkent-based economist, told Radio Ozodlik. As of May 1, Uzbekistan's foreign exchange reserves totaled $34.2 billion, of which about $26.5 billion was gold, according to the country's Central Bank. By the end of 2023, the country's "financial safety cushion" has decreased by $1.2 billion - from $35.77 billion to $34.56 billion. Gold helps Uzbekistan "stay afloat" in difficult economic conditions. Between 2010 and 2014 the country exported 207 tons; between 2015 and 2020 it exported 480 tons. Now, Uzbekistan produces an average of 100 tons of gold per year, with plans to produce 150 tons. At this rate, gold reserves should last 20-30 years, but the republic is developing new quarries, the reserves of which could be quite impressive. For example, reserves in the Yoshlik mine may be up to 5,000 tons. Nevertheless, according to analysts, the constant sale of gold is not a long-term solution, and it will be necessary to develop industrial production and services, and export goods with high added value. Uzbekistan's growing dependence on gold is evidence of obvious problems in the economy, which, despite visible positive changes, remains in a deadlock. By the end of 2023, when Uzbekistan's trade deficit amounted to a record $13.7 billion, the share of gold exports in the total volume rose to a third. President Mirziyoyev's rise to power marked sweeping economic reforms that have attracted foreign investors, but at the same time increased external debt, which by the end of 2023, according to the International Monetary Fund, amounted to $31.7 billion, or 35.1% of the country's GDP, roughly doubling in the past five years. Under Islam Karimov (Uzbekistan's first president) this varied between 10-15%.

Russia GDP

Kyrgyzstan’s Economy Grew Strongly in 2022 and So Far in 2023, Says IMF

Kyrgyzstan’s Economy Grew Strongly in 2022 and So Far in 2023, Says IMF The economy of Kyrgyzstan performed strongly in 2022, expanding at 6.3% despite the headwinds from the difficult regional environment. Tax revenue improved sharply, and public debt declined to 49% of GDP. Headline inflation fell from 14.7% in December 2022 to 9.2% in October 2023, Nikoloz Gigineishvili, head of an International Monetary Fund (IMF) mission that held consultations with the Kyrgyz Republic during November in Bishkek said in a statement on December 4th. The current account deficit widened significantly to 43.6% of GDP in 2022 as non-oil imports increased by 26% of GDP and gold exports were suspended, while re-exports to Russia were not captured in official statistics, the statement said. Growth is expected to remain at around 4% in the medium term, and inflation to decline to mid-single digits. However, further escalation of the war in Ukraine and secondary sanctions which could further weaken the Russian economy and result in the return to Kyrgyzstan of migrant workers could reduce trade and growth, the IMF statement concludes.