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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...

Economy

IMF Warns of Risks for Rapidly Growing Kyrgyz Economy

Kyrgyzstan continues to record strong economic growth and rising per capita income. At the same time, elevated inflation above the National Bank’s 5%-7% target range, rapid credit expansion, strong wage growth, and high liquidity point to signs of economic overheating, requiring timely macroeconomic policy adjustments. These are the key points of an International Monetary Fund (IMF) statement following consultations with Kyrgyz authorities in Bishkek between March 18 and April 1. The IMF noted that after recording fiscal surpluses between 2023 and 2025, the overall fiscal balance is projected to shift into deficit in 2026, reflecting higher public-sector wages and increased capital spending. The mission also emphasized that monetary policy should remain focused on bringing inflation back within the National Bank’s target range. Strengthening the central bank’s independence and governance remains critical to safeguarding price stability. Repeated transfers of National Bank profits to the state budget, while capital remains below statutory thresholds, risk undermining institutional credibility and the effectiveness of monetary policy. The IMF urged the authorities to uphold the provisions of the constitutional law governing the National Bank and to suspend regular profit transfers until capital is adequately restored. According to the IMF, Kyrgyzstan’s banking sector is stable, well capitalized, and liquid. However, nonperforming loans remain elevated, and rapid credit growth could increase vulnerabilities if macroeconomic conditions deteriorate. The mission stressed that structural reforms remain essential to support sustainable and inclusive growth. These should focus on strengthening governance, reducing the state’s role in the economy, and fostering private-sector-led development. Key priorities include reforming state-owned enterprises, improving the business environment and competition, strengthening the rule of law and anti-corruption efforts, and addressing informality and labor market rigidities. According to the National Statistical Committee, Kyrgyzstan’s gross domestic product (GDP) grew by 11.1% in 2025, while inflation reached 9.4%. The government aims to sustain economic growth under the National Development Program through 2030, targeting average annual GDP growth of 8%, total GDP of at least $30 billion, and GDP per capita of $4,500. The Asian Development Bank (ADB) also forecasts continued strong growth, projecting GDP expansion of 8.9% in 2026 and 8.4% in 2027, following 11.1% growth in 2025. Growth is expected to moderate as construction and trade normalize, although domestic demand will remain the main driver, supported by resilient remittance inflows and sustained investment under the National Development Program. ADB projects inflation to rise to 10.3% in 2026 before easing to 8.5% in 2027, driven by strong domestic demand and planned increases in electricity and heating tariffs. Concerns about overheating are not new. A July 2025 meeting at the Kyrgyz Ministry of Economy and Commerce highlighted structural imbalances, including a widening gap between income growth and labor productivity, rising inflation, labor shortages, increased public spending, and rapid growth in consumer lending. Economist Azamat Akeneev told 24.kg that sustainable growth is not possible without improvements in labor productivity and exports. “If the economy grows through consumption and government spending rather than competitiveness and expansion into foreign markets, sooner or later an adjustment phase...

Economy

Kyrgyz Citizens Are Spending More and Saving Less

The financial habits of Kyrgyz citizens has changed significantly in recent years: people are spending more and saving less. This conclusion was reached by the country's National Statistical Committee. According to the agency, the share of household savings has more than halved, from 24.3% of income in 2020 to 10.8% in 2024. Until 2021, however, Kyrgyz citizens had shown a tendency to save. This contributed to the growth of banks’ deposit bases, and the authorities noted increasing confidence in the financial sector. Formally, this confidence remains, but household behavior has changed. In 2024, the country’s gross disposable income amounted to approximately $20.5 billion, of which roughly $18.2 billion was directed towards consumption. A significant share of economic activity is therefore effectively geared towards meeting current domestic demand. This trend coincides with a period of strong economic growth that the authorities have described as a “leopard’s leap.” In recent years, GDP growth has reached about 10% annually. Economists say domestic demand remains the key driver of growth. The construction sector is expanding, mortgage lending is increasing, and infrastructure projects and gold mining continue to develop. Another indicator of changing behavior is the rise in household consumer spending. Its share increased from 75.4% of GDP in 2020 to 86.9% in 2024. At the same time, statistics show so-called negative savings, meaning that the population is spending more than it officially earns. In practice, this reflects the active use of loans and other external sources of financing. The banking sector and the State Mortgage Company (SMC) play a key role in this process, supporting consumption and thereby stimulating economic growth. Despite continued economic expansion, according to official data, GDP increased by 8% in January-February 2026, analysts warn of potential risks. The decline in savings means households have fewer resources to build a financial “safety cushion.” With incomes largely directed towards current consumption, their resilience to economic shocks is weakening.

Economy

Tokayev: Kazakhstan’s GDP Could Reach $320 Billion by End of 2026

Kazakhstan’s gross domestic product could reach $320 billion by the end of 2026, President Kassym-Jomart Tokayev said at a forum for parliamentary deputies. Speaking at the event, Tokayev noted that the global economy is facing heightened geopolitical tensions and trade conflicts, which he linked to declining trust between major powers and what he described as a weakening of international responsibility mechanisms. “Of course, the current situation directly affects our country’s opportunities. But despite this, we are overcoming challenges, maintaining steady economic growth, and consistently implementing our national strategy,” Tokayev said. According to him, Kazakhstan’s GDP reached $306 billion in 2025. He described this as the second-highest level among post-Soviet countries and the highest in Central Asia. Tokayev also said Kazakhstan had entered the world’s top 50 economies and cited forecasts by international financial institutions suggesting that GDP could reach $320 billion by the end of 2026. Investment and reserves Kazakhstan continues to attract significant foreign direct investment, Tokayev said, noting that net inflows had exceeded $150 billion. According to him, this represents about 69% of total investment directed to Central Asia. He added that the country’s financial buffers remain substantial. Gold and foreign exchange reserves stand at about $74 billion, while total reserves, including assets held in the National Fund, amount to approximately $139 billion. Industrial and agricultural growth Tokayev said economic expansion is being driven not only by overall growth but also by structural changes. In particular, manufacturing output has increased by more than 6% annually over the past two years. He also highlighted the importance of the agro-industrial sector, which he said affects the living standards of 7.4 million people, or about 36% of Kazakhstan’s population. State support for agriculture has increased in recent years. In 2025, more than $2 billion was allocated for concessional lending to farmers, which Tokayev described as the largest level of support provided to the sector since independence. According to Tokayev, government policy aims not only to expand agricultural production but also to develop a modern, export-oriented agro-industrial economy. He said that in 2025 around 250 new production facilities were launched in the sector, while international companies increased their presence in agricultural projects. Major investment initiatives involving foreign partners are being implemented in the Almaty, Akmola, Zhambyl, and North Kazakhstan regions, as well as in the city of Shymkent. Total investment in these projects exceeds $1 billion and is expected to create tens of thousands of jobs. As previously reported by The Times of Central Asia, export revenues from Kazakhstan’s agro-industrial sector reached $7 billion in 2025, an increase of 37% compared with the previous year.

Economic Growth

Central Asia Accounts for 1.3% of Global Economic Growth

A recent study by Visual Capitalist, based on projections from the International Monetary Fund, maps who is powering global growth in 2026. The analysis highlights heavyweights like China, which accounts for 26.6% of global GDP growth, India at 17.0%, and the United States at 9.9%. Together, these three economies account for roughly 53–54% of global economic expansion, underscoring their scale and sustained growth momentum. Yet beneath those headline figures lies a quieter but strategically important development: Central Asia is steadily increasing its contribution to global economic growth. According to the study, Kazakhstan is set to contribute 0.7% of total global GDP growth in 2026, making it the clear regional anchor. Uzbekistan adds 0.4%. Turkmenistan will contribute 0.1%, while both Kyrgyzstan and Tajikistan will account for approximately 0.05% each. Taken together, this amounts to a 1.3% share of global GDP growth. While modest in absolute terms, the figure is notable given the region’s scale. With a population of over 80 million—comparable to Germany and Turkey—Central Asia’s aggregate contribution compares with these mid-sized advanced economies, which account for roughly 0.9% and 2.2% of global growth respectively. Moreover, with projected average annual growth exceeding 6%, Central Asian economies are expanding faster than much of Europe and other mature markets, reinforcing their rising relative contribution to global economic momentum.

Economic Growth

Trade Accounted for More Than a Quarter of Kazakhstan’s Economic Growth in 2025

The trade sector accounted for 26% of Kazakhstan’s total economic growth in 2025, according to the Ministry of Trade and Integration. Data from the National Statistics Bureau show that the country’s GDP grew by 6.5% in January-December 2025, equivalent to $20.1 billion in nominal terms, bringing the total size of the economy to $305.9 billion. More than a quarter of this growth was generated by trade. At a government meeting, the Ministry of Trade and Integration reported that domestic trade turnover reached $162.3 billion in 2025, while investment in the sector amounted to $2.6 billion. Non-resource exports totaled $41 billion, and services exports increased by 3.7% to $12.3 billion. Speaking at the meeting, Deputy Prime Minister and Minister of National Economy Serik Zhumangarin said the ministry’s objective is not only to maintain current momentum but also to raise trade to a new level of efficiency and competitiveness. Key priorities include expanding wholesale and retail turnover, increasing the share of domestically produced goods in the market, ensuring stable supplies of socially important products, shortening the supply chain between producers and retailers, boosting exports, and systematically reducing the shadow economy in the trade sector. Special emphasis was placed on measures to curb inflation and ensure adequate food supplies for the domestic market. According to Zhumangarin, a preliminary pool of approximately 1,500 projects has been formed under the “Investment Order” initiative. These projects are aimed at expanding the production of goods with high import dependence, including more than 500 in the agro-industrial complex, over 400 in manufacturing, and the remainder in infrastructure. The ministry’s key task is to secure guaranteed sales channels for products manufactured within these projects. The Times of Central Asia previously reported that trade between Central Asian countries and China exceeded $100 billion in 2025, setting a new record.