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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.

Economy

Kazakhstan Targets Raising Wage Share of GDP to 40%

The Kazakh government is preparing a series of measures aimed at accelerating wage growth and increasing the overall wage fund, with the goal of raising its share in the country’s GDP to 40%, Prime Minister Olzhas Bektenov announced during an expanded government meeting. According to government estimates, household incomes are currently growing more slowly than the broader economy and corporate profits, including those generated with state support. At present, wages account for roughly 31% of Kazakhstan’s GDP, a figure considered relatively high by Central Asian standards but still below the levels seen in developed economies, where wage funds typically exceed 40% of GDP. Kazakhstan’s GDP growth in 2025 reached $20.1 billion in monetary terms, with the economy expanding at an annual rate of 6.5%, according to official data. To address the income gap, the government is developing a comprehensive package that includes financial, tax, and regulatory incentives for employers to raise wages. The initiative also prioritizes the creation of new, decently paid jobs, upskilling of the workforce, and reducing the financial burden on citizens. Real income growth has been designated a key economic policy priority for 2026. A complementary role will be played by the upcoming Joint Action Program for 2026-2028, developed by the Cabinet, the financial regulator, and the National Bank. The program aims to stabilize the macroeconomic environment and improve public welfare, setting a target of household income growth at a rate of at least 2-3% above inflation each year. According to official statistics, the average monthly salary in Kazakhstan stood at approximately $873 by the end of the third quarter of 2025. However, earlier reports indicated that the minimum wage will remain frozen at $172 in 2026, despite prior commitments to increase it.