Inflation - The Times Of Central Asia

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Economic Growth

Central Asia Growth Forecasts Remain Strong in Latest ADB Outlook

Four of Central Asia’s five economies are expected to grow faster in 2026 than developing Asia and the Pacific as a whole, according to the Asian Development Bank’s September Asian Development Outlook. ADB forecasts growth of 5% across developing Asia and the Pacific this year, compared with 8.9% in Kyrgyzstan, 7% in Uzbekistan and Tajikistan, and 6.3% in Turkmenistan. Kazakhstan is the exception, with growth forecast at 4.8%. Kyrgyzstan is growing faster than its neighbors but is also facing the highest inflation among the five countries. ADB forecasts inflation at 11.2% this year and 8.5% next year. Growth continues to be supported by domestic demand and sustained investment, while ADB says import dependence and electricity-generation shortfalls are contributing to inflationary pressures. For Uzbekistan, ADB forecasts gross domestic product growth of 7% and inflation of 6.7% in 2026. In 2027, the figures are expected to be 6.8% and 5%, respectively. Stronger-than-expected economic activity prompted ADB to upgrade Uzbekistan’s 2026 growth forecast in its September outlook. Tajikistan is also forecast to grow by 7% in 2026, with inflation at 4.5%. Growth is expected to slow to 6.8% in 2027, while inflation is forecast to edge up to 4.7%. ADB lowered its 2026 growth projection in September, saying the escalation of Russia’s war in Ukraine had disrupted fuel imports and constrained near-term economic activity. Kazakhstan, the region’s largest economy, is growing more slowly than its neighbors. ADB expects growth of 4.8% this year and 4.5% next year, with inflation forecast at 10.4% and 9.5%, respectively. The bank left its growth and inflation forecasts unchanged from its previous outlook, with inflation expected to ease only gradually. For Turkmenistan, ADB forecasts growth of 6.3% in 2026 and 6.2% in 2027, with inflation at 6% in both years. The country’s economic indicators remain more difficult to compare with those of its neighbors because of limited access to reliable and detailed economic data. Its economy also remains heavily dependent on natural gas exports, with China its main gas market. Central Asia’s growth figures look strong against the Asian backdrop, but ADB is warning of energy and climate risks across developing Asia and the Pacific. Prolonged disruption to global energy markets could keep oil and gas prices elevated and volatile. For energy importers, that means higher fuel costs and additional inflationary pressure, while hydrocarbon exporters may benefit from higher prices but remain vulnerable to disruption in production and export routes. Another risk is a very strong El Niño, which ADB expects to persist through the first quarter of 2027. Extreme weather could reduce agricultural production and push up food prices, while a decline in hydropower generation could increase demand for other energy sources. For Kyrgyzstan and Tajikistan, where hydropower supplies most electricity, weather and water availability add another layer of vulnerability. The differences between forecasts for the region remain substantial. In August, The Times of Central Asia compared projections from international financial institutions. The Eurasian Development Bank (EDB) forecast 2026 growth of 10.2% for Kyrgyzstan, 8.3% for Tajikistan,...

Inflation

Kyrgyzstan Inflation Hits 12% as Government Plans Food and Fuel Measures

Kyrgyzstan plans to curb rising prices by importing livestock and grain, subsidizing fuel, and increasing domestic food production. The draft plan for 2026-2027 comes after annual inflation reached 12% in August, alongside double-digit economic growth. The Ministry of Economy and Commerce published details of the draft plan on September 21. In 2027, the government aims to keep inflation within 7.7-8.5%. Without additional measures, the ministry estimates that inflation could reach 8.7-9.5% in 2027 because of global prices, external shocks, and supply disruptions. Annual inflation had already reached 11.5% in July, up from 11% a month earlier, before rising to 12% in August, according to the National Statistical Committee. The medium-term target of the National Bank of the Kyrgyz Republic, the country’s central bank, is 5-7%. Much of the plan focuses on food. The state-owned Kyrgyz Agroholding is expected to import at least 20,000 head of cattle from Kazakhstan, Belarus, and Russia, adding at least 2,700 tons of meat to the domestic market. After prices rose in 2025, the authorities imposed limits on the cost of certain types of meat and temporarily banned livestock exports. The draft calls for the construction of four large poultry complexes and 200 livestock facilities with a combined capacity for 10,000 animals. Kyrgyz Agroholding is expected to open 100 direct-sales outlets for meat and agricultural products. The area planted with corn and oilseed crops would be expanded, while 11 trade and logistics centers would be built to store agricultural produce. The draft also calls for flour mills to import 700,000 tons of wheat from Russia and Kazakhstan. The ministry says the imports are intended to ensure that domestic wheat demand is fully covered. The government is also subsidizing fuel. Kyrgyzstan remains heavily dependent on imported petroleum products, with Russia supplying more than 90% of its imported gasoline, meaning higher import costs quickly feed into transportation, food, and service prices. The state compensates importers for part of the difference between purchase costs and regulated retail prices. The subsidies have been extended through December 31, 2026. In Bishkek and the Chuy region, agreed maximum retail prices are 87.9 soms per liter for AI-92 gasoline, about $1; 99.9 soms for diesel; and 48.8 soms for liquefied petroleum gas. Prices are capped at slightly higher levels elsewhere in the country. Without compensation, AI-92 would cost an estimated 111-118 soms per liter and diesel 125-137 soms. A one-year moratorium on increases in a number of regulated tariffs and payments for the population has also been in effect since July 24. High inflation persists alongside rapid economic growth. First Deputy Chairman of the Cabinet of Ministers Daniyar Amangeldiev said GDP had grown by an average of 10.2% annually over the past four years. GDP per capita increased from $1,230 in 2020 to $3,080 in 2025, while the economy grew by another 11% in the first eight months of 2026. In 2025, 1.779 million people, or 24% of the population, remained below the national poverty line, down from 25.7% a year earlier. On...

Economic Growth

Kyrgyzstan Records Double-Digit Growth as Inflation Stays Above 11%

Kyrgyzstan’s economy grew by 11.1% in the first seven months of 2026, but households also faced double-digit inflation. Annual price growth reached 11.5% in July. The latest poverty figures show that 24% of the population remained below the national poverty line in 2025. According to the latest macroeconomic review by the Eurasian Development Bank (EDB), the expansion has been driven primarily by a surge in investment and strong consumer demand. Kyrgyzstan’s growth rate exceeded those reported by several Central Asian neighbors, although the figures cover different periods. Kazakhstan’s economy expanded by 4.1% in January–July. Uzbekistan and Tajikistan grew by 8.5% and 8.2%, respectively, in the first half of the year. The EDB forecasts growth of 10.2% for Kyrgyzstan over 2026 as a whole. Average real wages, adjusted for inflation, rose by 15.3% in January–June. This indicates stronger purchasing power among wage earners on average, but does not establish an improvement across all households. Investment increased by 58.8% over the first seven months. Budget financing for investment increased by about 70%, while bank financing rose to 4.3 times its previous level. Fixed-capital investment financed by foreign direct investment rose to 15.3 times its previous level. Budget revenues also increased by 48.8% in the first half of the year, while the republican budget recorded a surplus equivalent to 6.1% of GDP. Price Growth Remains in Double Digits Annual inflation reached 11.5% in July, up from 11% a month earlier. The pressure is visible in everyday purchases. In July alone, average prices for horsemeat rose by 5.4%, lamb by 4%, and beef by 3.9%, although potatoes became cheaper. Housing and utility costs were also rising rapidly, with annual inflation in that category reaching 11.2%. Fuel prices are another source of pressure. The National Bank says higher global oil prices, amid the conflict in the Middle East and concerns over petroleum supplies, have raised the cost of imported fuel. Those increases then feed into transport and production costs across the economy. By August 24, the National Bank put annual inflation at 11.7%, with prices up 7.3% since the start of the year. On the same day, it kept its policy rate at 12%. The central bank cited persistent inflationary pressure, including higher import costs and production expenses. Its inflation target range is 5%–7%. The EDB expects inflation to end 2026 at about 11.5%, still well above that range. IMF Proposes Changes to Public-Sector Pay The International Monetary Fund has also examined public-sector compensation. In a technical assistance report published on September 2, it notes pay raises of 50% for doctors and 25% for nurses in 2024. The report also records a 63% increase in remuneration for the social sector in 2026. According to the IMF, large, infrequent pay increases can add to inflationary pressures and make government spending more difficult to manage. The IMF recommends moving away from large, episodic increases toward more regular salary adjustments that account for inflation, available fiscal space, and labor market conditions. This would make wage growth and government...

Inflation

Kyrgyzstan Drafts $419 Million Plan to Curb Rising Prices

Kyrgyzstan has drafted a plan worth about $419 million to curb rising prices in 2026–2027. The authorities aim to increase food production and build reserves, but fuel imported primarily from Russia remains a major source of inflationary pressure largely beyond the government’s control. The draft was presented to the Cabinet on August 21. During the first seven months of 2026, consumer prices and tariffs in Kyrgyzstan rose by 6.7% from their December 2025 level. Average annual inflation over the same period was 10.7%. Food prices rose particularly sharply, with fresh fruit up 16% and meat products 14.5%. Lamb recorded the largest increase at 23.1%. Horse meat rose by 16%, while beef increased by 14.2%. The authorities have already intervened directly in the meat market. In March, Kyrgyzstan introduced a six-month ban on livestock exports. Temporary state controls on beef and mutton prices also applied earlier this year but expired on May 2. The plan calls for increasing the productive livestock population by at least 20,000 head. Agribusinesses will be eligible for preferential loans, while the dairy and poultry sectors will receive subsidies. Storage facilities with a combined capacity of 18,000 metric tons are planned in all seven regions. Farmers are to receive 68,000 metric tons of seed and the necessary amounts of mineral fertilizer. The government also intends to ensure sufficient wheat supplies for the domestic market and purchase another 20,000 metric tons from local producers for state reserves. The draft would establish direct supply channels for agricultural products and expand the network of retail outlets operating without intermediaries. Kyrgyzstan relies on imports for almost all of its petroleum products. Deputy Energy Minister Nasipbek Kerimov said in July that Russia had supplied about 95% of the country’s annual fuel needs in recent years, with total consumption of around 2 million metric tons. This summer, Russia’s fuel shortages worsened amid refinery outages following Ukrainian drone attacks, high seasonal demand, and transport problems. Moscow tightened restrictions on fuel exports and turned to imports to support domestic supplies. For Kyrgyzstan, the decline in Russian supplies quickly became a problem. According to the National Statistical Committee of the Kyrgyz Republic, the average price of AI-92 gasoline reached 88.24 soms per liter by August 12, around 6% above the July average. AI-95 rose by 12% to 109.24 soms, while diesel increased by 5% to 102.08 soms. The government has already raised its year-end inflation forecast to 14–15% from an earlier projection of 9%, citing rising fuel costs as one reason. The National Bank of the Kyrgyz Republic kept its policy rate at 12% on July 27. Among the external inflation risks, the central bank cited volatile global food prices and possible disruptions to petroleum-product supplies through the Strait of Hormuz. Its medium-term inflation target is 5–7%. Kyrgyzstan cannot quickly replace Russian fuel, but importers have begun seeking supplies farther afield. Kanatbek Eshatov, president of the Association of Oil Traders of Kyrgyzstan, said on August 12 that reduced supplies from Russian refineries had prompted deliveries from...

Economic Growth

Uzbekistan Raises 2026 Growth Forecast to 8.1%

Uzbekistan has raised its 2026 economic growth forecast from 6.6% to 8.1%, after stronger-than-expected performance last year and in the first quarter of 2026. The Ministry of Economy and Finance’s updated Fiscal Strategy for 2027-2029 projects nominal GDP of 2.183 quadrillion soums this year (about $180 billion). The revision follows growth of 7.7% in 2025, above the original 6.6% forecast, and an 8.7% expansion in the first quarter of 2026. The ministry expects market services to grow by 16.6% in 2026, industrial production by 8%, construction by 12.4%, and agriculture by 5%. Inflation is forecast to slow to 6.5%, while unemployment falls from 4.8% in 2025 to 4.5%. The stronger projection rests partly on domestic demand. The strategy expects non-gold exports to rise by 20%, capital investment by 12.9%, and remittance growth to remain around 10%. Separate Central Bank figures show that remittances rose 13% to $3.8 billion in the first quarter, helping to support household spending even as Russia’s share of transfers declined. Growth is forecast to slow to 6.9% in 2027, before rising to 7.1% in 2028 and 7.4% in 2029. Inflation is projected at 5-6% in 2027 and 5% in 2028 and 2029. The government also intends to keep the fiscal deficit within its rules and public debt below 40% of GDP. The Ministry of Economy and Finance says meeting these targets will require stronger tax administration, fewer ineffective exemptions, tighter oversight of public-private partnerships, and further action against the shadow economy. It also plans more transparent medium-term budgeting and closer scrutiny of fiscal risks. The success of those reforms will determine whether rapid growth can be sustained without weakening public finances. The fiscal strategy uses the IMF’s April global outlook as part of its external assumptions. The government’s estimate is considerably more optimistic than the IMF’s 6.8% forecast. In its June assessment, the Fund said Uzbekistan’s outlook remained favorable but warned that the economy could be running above its potential. It identified weaker global conditions and domestic overheating as the principal risks. The revised figures also strengthen the government’s claim that the Uzbekistan-2030 Strategy target of an economy worth more than $240 billion remains achievable. The plan relies on private investment, export growth, higher productivity, and continued macroeconomic reforms. Economist Otabek Bakirov said the 8.1% projection would mark the strongest growth in Uzbekistan’s recent history. “According to the Fiscal Strategy forecasts, economic growth will accelerate to 8.1% in 2026. If this happens, it will become a new record for the country’s recent history,” he wrote in an analysis of the forecast. In a separate calculation, Bakirov put nominal GDP above $205 billion in 2027, $228 billion in 2028, and $257 billion in 2029. On that path, the $240 billion target would be surpassed a year early. However, he cautioned that the scenario depends on maintaining strong growth, low inflation, and exchange-rate stability, without a major domestic or external crisis. A weaker soum would reduce the dollar value of GDP even if output continued to rise quickly...

International Monetary Fund

IMF Growth Forecast for Uzbekistan Warns of Inflation and Global Risks

Uzbekistan’s economy performed strongly in 2025, with the International Monetary Fund (IMF) reporting growth across sectors. Inflation fell and the fiscal deficit narrowed. The Fund urged policymakers to keep monetary policy tight and continue reforms as geopolitical tensions and global uncertainty add risks. Uzbekistan’s real GDP expanded by 7.7% in 2025, driven by strong domestic consumption and investment. The unemployment rate fell by 0.7 percentage points from the previous year to 4.8%. Growth was supported by rapid expansion in services and construction. Consumer price inflation declined from 9.8% at the end of 2024 to 7.3% at the end of 2025. The IMF attributed the improvement to the fading impact of energy price increases introduced in 2024 and the appreciation of the Uzbek som against the U.S. dollar. Tight monetary policy by the Central Bank also helped bring down inflation. Core inflation declined during the year. External balances improved as the current account deficit narrowed to 3.9% of GDP. Strong exports and remittance inflows supported the decline. High commodity prices also helped. International reserves remained at comfortable levels, equivalent to around 13 months of imports. The fiscal deficit fell to 2.1% of GDP, below the government’s target of 3%. The IMF expects economic growth to remain resilient in 2026, forecasting GDP growth of 6.8%. Continued reforms and investment are expected to support activity. Remittances and elevated gold prices should also help sustain growth. The Fund projects growth will moderate to around 6% in 2027 as domestic demand gradually slows. Despite the positive outlook, risks have increased because of the conflict in the Middle East and its potential impact on the global economy. Uzbekistan has limited direct trade and remittance links with countries affected by the conflict. However, higher oil prices and trade disruptions could affect the country indirectly through key trading partners. Weaker global growth could add further pressure. The IMF warned that inflation is likely to remain above the Central Bank’s 5% target in 2026. Higher global oil prices, combined with strong domestic demand, could slow disinflation. The Fund recommended that the Central Bank keep its policy rate at a restrictive level and tighten monetary policy further if inflationary pressures persist. The Fund advised the government to avoid spending increases beyond those already planned in the budget. Any support measures linked to the Middle East conflict should be temporary and targeted toward vulnerable groups, rather than broad subsidies or price controls. The IMF called for faster privatization of state-owned commercial banks and enterprises. It also recommended stronger corporate governance and continued work to improve fiscal transparency and debt management. The Fund highlighted labor market challenges, including low female labor force participation and skills mismatches. High levels of informal employment remain another concern. Further progress in governance reform and competition policy could help attract additional private investment. The IMF said Uzbekistan’s commitments linked to accession to the World Trade Organization could also support long-term economic growth. The country enters 2026 from a position of economic strength, but maintaining stability and continuing...