GDP - The Times Of Central Asia

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Economy

Central Asia’s Economy Expands Fourfold Over Two Decades, Outpacing Global Growth Rates

Over the past two decades, the gross domestic product (GDP) of Central Asia has grown fourfold in real terms and sevenfold in nominal terms, according to Evgeny Vinokurov, Deputy Head of the Eurasian Development Bank (EDB). Vinokurov highlighted significant improvements in the region’s economic landscape. Over the same period, population mobility has tripled, and incoming investments have surged by more than 17 times. Vinokurov emphasized that the last two years have underscored Central Asia’s status as an economically attractive and strategically important region. Positioned at the heart of Eurasia, Central Asia boasts strong transport and transit potential, a growing consumer market, and expanding opportunities for investment. Despite external challenges, the region’s economies have displayed remarkable resilience, maintaining steady growth and weathering global shocks effectively. Between 2022 and 2023, Central Asia’s economies grew at an average annual rate of 4.8%, significantly outpacing the global average of 3.4%. This makes the region’s growth rate 1.4 times faster than the global average. Vinokurov projected that Central Asia’s nominal GDP will surpass $500 billion in 2024. Despite these achievements, Central Asia faces complex challenges that require regional collaboration. Key issues include: -- Lack of access to the sea: Geographical isolation limits trade and economic integration. -- Climate and environmental risks: These pose threats to sustainable development. -- Water and energy management: Disjointed policies among countries hinder efficiency and sustainability. Vinokurov stressed the importance of joint efforts to address these challenges. Coordinated development of water and energy resources, renewable energy, and the Eurasian transport framework can yield cost-effective and efficient solutions. Central Asia’s impressive economic growth over the past 20 years reflects its potential as a key economic and transit hub in Eurasia. While the region faces significant challenges, collaborative solutions and investments in infrastructure and sustainability could unlock further growth and prosperity.

Economy

S&P Global Ratings Predicts 5.6% Annual Growth for Uzbekistan Through 2027

S&P Global Ratings has reaffirmed Uzbekistan’s long-term sovereign credit rating at BB, forecasting strong economic growth averaging 5.6% annually from 2024 to 2027. This growth will be driven by public investment and private consumption. While rising public and external debt presents some risks, S&P expects fiscal and current account deficits to narrow after peaking in 2023. Economic Projections Uzbekistan’s gross general debt is projected to reach 39% of GDP in 2024, a level considered moderate by global standards. Most of this debt originates from official creditors under concessional terms. The agency’s stable outlook reflects robust growth prospects, balanced against challenges posed by debt accumulation. The country’s economy expanded by 6.6% in the first nine months of 2024, fueled by sectors such as construction, trade, and communications. Investments continue to play a pivotal role, with Uzbekistan maintaining one of the world’s highest investment-to-GDP ratios at 34%. Key investment areas under the “Uzbekistan - 2030” strategy include energy, transport, agriculture, and tourism. Diversification and Energy Goals As part of efforts to diversify energy sources, Uzbekistan is targeting 40% green energy by 2030. Saudi Arabia’s ACWA Power has pledged $7.5 billion in investments for electricity projects. The government is also expanding exports of critical resources such as copper, gold, silver, and uranium to boost revenue streams. Opportunities and Risks Despite challenges such as low GDP per capita and reliance on remittances, Uzbekistan benefits from a young workforce and rising foreign investment. However, risks remain, including potential sanctions on companies linked to Russia and difficulties in creating sufficient jobs. In 2024, remittance inflows - primarily from Russia, along with Germany and South Korea - increased by 35%, providing a significant economic boost. Trade with Russia also grew by 26%, and Uzbekistan signed a two-year gas import contract with Gazprom. Meanwhile, the government is taking steps to mitigate the risks of secondary sanctions stemming from its trade ties with Russia. Broader Context These developments align with Uzbekistan’s long-term economic strategies while highlighting both opportunities and vulnerabilities. S&P’s latest forecasts reaffirm the country’s growth trajectory, supported by strategic investments and economic reforms, yet underscore the importance of managing debt and external risks.

Infrastructure Development

Uzbekistan Targets $200 Billion GDP by 2030 with Transport Reforms

On November 26, President Shavkat Mirziyoyev outlined transformative plans for Uzbekistan’s state-owned railway and aviation sectors, setting an ambitious goal to increase the country’s GDP to $200 billion by 2030. Significant changes are already being implemented to enhance efficiency and convenience. In the railway sector, six independent enterprises have been created under “Uzbekistan Railways.” The company added 1,200 new freight cars, halving domestic freight transportation times. The digitalization of operations has streamlined processes, cutting the ordering stage for freight cars from seven days to three and reducing processing time from 72 hours to just 12 hours. Around Tashkent, train traffic has increased by 30%, and for the first time, the previously unprofitable enterprise posted a profit of 30 billion UZS ($2.3 million) this year. In the aviation sector, Uzbekistan Airways has seen flights increase by 25%, with domestic flights surging 2.5 times. The airline now holds a 20% share of international transport in Central Asia, and annual passenger traffic is projected to exceed 6 million. “Uzbekistan Airports” has also expanded services for planes, cargo, and passengers. Greater private sector involvement in airport management has yielded notable results, with 44 airlines currently operating in Uzbekistan. Cargo transportation through airports is expected to grow by 22% this year. “The economy and trade relations in our country are developing year after year. The population’s income and the tourism potential of the regions are also increasing. By 2030, we have set a goal to increase the volume of our gross domestic product to $200 billion. Therefore, we should pay special attention to the transport arteries,” Mirziyoyev said. To support these developments, a new version of the Law “On Railway Transport” has been signed, replacing the 25-year-old legislation. The updated law aims to attract private companies and investments to further develop infrastructure and accelerate industry growth.

Banking

Kyrgyz National Bank Maintains Discount Rate at 9% Amid Stable Inflation and Economic Growth

The National Bank of the Kyrgyz Republic has announced its decision to keep the discount rate steady at 9%, according to a statement published on its official website. The Bank credited its effective monetary policy for maintaining stable inflation. As of November 2024, annual inflation dropped from 7.3% at the start of the year to 5.2%, aligning with the regulator’s targets. Inflationary pressures remained moderate, with slowed price growth in both food and non-food categories. Key drivers of price levels include strong domestic demand and the impact of tariff policy measures. Kyrgyzstan’s economy continues to demonstrate robust growth, primarily driven by expansion in the construction and services sectors. Real GDP grew by 9.6% during the first ten months of 2024, fueled by increased domestic consumption supported by rising household incomes. Higher real wages and a surge in individual remittances have contributed significantly to this growth. Fixed asset investments, largely financed by domestic sources, have also risen. The domestic foreign exchange market has shown resilience, with fluctuations in the national currency attributed to seasonal factors and balanced supply-demand dynamics. The National Bank has conducted $20.75 million in net foreign currency sales since the beginning of the year to prevent sharp exchange rate volatility. The Bank has progressively adjusted its discount rate over the past two years. In November 2022, it was reduced from 14% to 13%, followed by further reductions in 2024: from 13% to 11% in April and then to the current 9% in May. The next review of the discount rate is scheduled for January 27, 2025.

State Budget

Kazakhstan’s Public Debt Remains at ‘Comfortable Level,’ Says Economy Minister

On November 22, Nurlan Baibazarov, Kazakhstan’s Minister of National Economy, addressed the current status of the country’s public debt, emphasizing its manageable level. Baibazarov highlighted that international organizations, including the International Monetary Fund, the World Bank, and global credit rating agencies, consistently recognize Kazakhstan's low public debt. "The latest changes in international credit ratings indicate the fiscal and financial stability of our country,” Baibazarov stated. “We have significant reserves in the National Fund, as well as gold and foreign exchange reserves exceeding $100 billion. These serve as a financial safety cushion, enabling us to actively attract investments." Kazakhstan’s Concept of Public Finance Management imposes a limit ensuring that national debt does not exceed 32% of GDP. Baibazarov reported that the current figure stands at approximately 23%, reflecting a "safe and comfortable" level. He further explained that public debt should be seen as a tool for economic investment. "We build roads, invest in infrastructure, and launch new production facilities. These projects lay the groundwork for future economic growth and sustainable development," he added. As of October 1, 2024, Kazakhstan’s total public debt was reported to be over 30.5 trillion KZT (approximately $61 billion), equating to 22.6% of GDP. This reinforces the country's position within the fiscal parameters set by its government.

State Budget

Uzbekistan’s Public Debt Projected to Reach $45.1 Billion by 2025

According to the “Budget for Citizens” publication issued by Uzbekistan’s Ministry of Economy and Finance, Uzbekistan’s public debt is projected to reach $45.1 billion by the end of 2025. Updated estimates indicate that state debt will amount to $39.7 billion by the end of this year, rising to $45.1 billion, equivalent to 36.7% of GDP, in 2025. The publication’s primary focus is forecasting revenues, expenditure, and deficits in the state budget for 2025. State budget revenues are projected at 308,547 billion UZS ($24.19 billion), with the economy expected to grow by 6% in 2025, increasing to 6.1% in 2026 and 6.3% in 2027. State budget expenditure for 2025 is planned at 344,576 billion UZS ($27.02 billion), with 52% being allocated to social spending. The report provides detailed information on budget allocations by ministries and departments, their alignment with national sustainable development goals, and their impact on climate change. It also outlines how funds will be classified under development programs, ensuring transparency and adherence to Uzbekistan’s broader policy objectives.