World Bank - The Times Of Central Asia

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Economic Growth

World Bank: Central Asia’s Growth to Slow but Remain Resilient

Central Asia is set to remain one of the world’s fastest-growing regions, although its economic momentum is expected to moderate in the coming years, according to the World Bank’s Spring 2025 Europe & Central Asia Economic Update. The region posted a growth rate of 5.5% in 2024, with projections of 5.0% for 2025 and 4.4% for 2026 as oil output normalizes in Kazakhstan, re-exports fade, and remittance inflows settle. The World Bank also revised its 2024 forecast upward by 0.8 percentage points, citing stronger-than-anticipated domestic demand. The forecasts incorporate data available through April 10, 2025. Country-Level Outlook Uzbekistan is forecast to grow by 6.5% in 2024, followed by 5.9% in both 2025 and 2026. Kyrgyzstan is expected to expand by 9.0% in 2024 and 6.8% in 2025. Tajikistan will grow by 8.4% in 2024 and 6.5% in 2025. Kazakhstan’s growth is projected to be more moderate, at 4.8% in 2024 and 4.5% in 2025. The World Bank attributes much of the region’s expansion to robust domestic demand, including household consumption, investment, and government spending, rather than export performance. Remittances continue to play a vital role in economic stability: they account for nearly 40% of GDP in Tajikistan, over 20% in Kyrgyzstan, and are critical in reducing poverty in Uzbekistan, where poverty rates would nearly double in their absence. Investment and Long-Term Prospects With investment comprising about 26% of GDP, Central Asia boasts one of the highest investment-to-GDP ratios among developing regions. This is largely driven by construction and large-scale infrastructure projects, particularly in the energy and transport sectors. However, the road to high-income status remains long. According to the Bank, based on current trajectories, it would take Kazakhstan and Turkmenistan approximately 40 years, Kyrgyzstan 70 years, and Uzbekistan and Tajikistan over 100 years to reach the high-income threshold of $14,005 in per capita income, a benchmark set for 2023. Risks and Policy Recommendations These forecasts are based on data available through April 10, 2025, and reflect persistent challenges stemming from the COVID-19 pandemic, ongoing cost-of-living pressures, and regional trade disruptions since 2022. To sustain momentum, the World Bank urges policymakers to pursue structural reforms and channel investment into productivity enhancements, technology adoption, and innovation. Without such efforts, growth could fall below potential in the years ahead.

Grants

World Bank Approves $50 Million Grant for Tajikistan’s Economic Reforms

The World Bank’s Board of Executive Directors has approved a $50 million grant to support Tajikistan’s reform agenda, aimed at fostering competition, improving market conditions for the private sector, and strengthening public sector service delivery. The financing, announced by the Bank’s press service, comes from the International Development Association (IDA), its fund for low-income countries. The First Competitive and Inclusive Tajikistan Development Policy Operation (DPO) aligns with the country’s National Development Strategy 2030. Its primary goal is to help implement key government policies for building a more competitive and equitable economy. “We are proud to support these ambitious reforms designed to unlock the country’s economic potential and deliver tangible benefits to Tajik citizens,” said Wei Winnie Wang, Acting Country Manager for the World Bank Group in Tajikistan. “Fostering a more competitive and open market environment helps create new opportunities for businesses and consumers alike.” The DPO targets several priority areas: Increasing competition and improving governance in telecommunications and the digital sector. Expanding air transport connectivity. Strengthening the legal framework for foreign investment. Enhancing transparency in subsidies and power sector financing. By making energy sector funding more transparent, the reforms aim to encourage greater private investment in renewable energy. Another focus is improving the policy, legal, and financial frameworks for the Benefit Sharing Program (BSP) under the Rogun Hydropower Plant (HPP) Project. The BSP will channel part of Rogun’s electricity sales revenue to support poor and vulnerable households, complementing existing social safety nets. Development Policy Operations are one of the World Bank’s key tools for supporting policy and institutional reforms that drive sustainable growth and poverty reduction. The Bank last approved a similar operation for Tajikistan in 2023. Currently, the World Bank finances 26 projects in the country totaling $1.9 billion, combining IDA grants and highly concessional credits. As previously reported by The Times of Central Asia, poverty reduction in Tajikistan remains gradual. According to the World Bank’s Poverty, Prosperity, and Planet Report 2024, more than 25% of the population lives on less than $3.65 per day, even after the extreme poverty threshold was revised from $2.15 to $3.00.

Energy

Tajikistan’s Energy Paradox

Tajikistan stands out among developing countries for having achieved near-universal access to electricity by 2022. This milestone, documented in the international SDG7-2025 report by the UN, World Bank, WHO, IEA, and IRENA, places the country alongside Eastern European and South Caucasus states in electrification. However, beneath this achievement lie persistent vulnerabilities, particularly in rural and mountainous regions, where winter brings regular power outages due to seasonal dips in hydropower generation and surging demand. Firewood and Coal Still Dominant Despite near-total electrification, Tajikistan remains significantly behind in access to clean cooking fuels. Fewer than 40% of the population use modern, safe technologies. In villages, the majority of households still rely on coal, firewood, or even manure for heating and cooking, practices that pose serious environmental and health risks, especially for women and children. Tajikistan’s power sector is heavily dependent on hydropower, which accounts for over 90% of electricity production. While this results in low CO₂ emissions, it also creates structural vulnerabilities. Climate change and glacial retreat threaten the reliability of this single energy source. Meanwhile, the potential of solar and wind energy remains largely untapped due to a lack of investment, insufficient institutional frameworks, and limited support for decentralized energy projects. Lagging in Energy Efficiency Tajikistan is one of the most energy-intensive countries in the region. Aging heating systems, poorly insulated buildings, and inefficient technologies in agriculture and industry all contribute to this inefficiency. The SDG7 report emphasizes the need to upgrade buildings and adopt energy-saving technologies. Some progress has been made: with assistance from the European Bank for Reconstruction and Development (EBRD), thermal upgrades are underway in schools and hospitals. In 2021, Tajikistan received approximately $100 million in international support for energy projects, most of it allocated to hydropower. Major donors include the World Bank, the Asian Development Bank (ADB), and various UN agencies. However, investment in solar and wind energy, as well as broader energy efficiency initiatives, remains negligible. Experts are urging international partners to revise their priorities and fund projects that directly improve living standards, particularly in remote and rural areas. A Regional Disparity in Investment The pace of energy transition varies across Central Asia. While electrification is largely complete, access to clean cooking fuels remains uneven. Tajikistan and Kyrgyzstan are notably behind in this area. In contrast, Uzbekistan has emerged as a regional leader, securing the bulk of international energy investment. Uzbekistan, on the contrary, entered the top five world leaders in attracting investments in green energy. Globally, progress toward Sustainable Development Goal 7 (SDG 7) is slowing. As of 2022, 91% of the world’s population had access to electricity, but over two billion people still rely on harmful fuels for cooking. Energy efficiency improvements are lagging, advancing at just one-quarter of the pace needed to meet 2030 targets. Charting a Path Forward Experts recommend three immediate priorities for Tajikistan. First, scaling up decentralized solar and wind energy projects. Second, investing in the energy efficiency of buildings and infrastructure. Third, expanding access to clean cooking fuels through...

Child Poverty

World Bank: Poverty Falls in Kazakhstan, but Inequality and Child Poverty Persist

The World Bank has released a comprehensive report on poverty in Kazakhstan, analyzing trends from 2006 to 2021. Presented to journalists in Almaty, the report paints a detailed picture of the country's evolving socio-economic landscape. Defining Poverty Poverty is broadly defined as the inability to meet basic human needs, including food, clothing, clean water, sanitation, education, and healthcare. One standard measure is the subsistence minimum set by the government. As of 2021, the international poverty line was $3 per person per day in low-income countries. For upper-middle-income economies like Kazakhstan, the threshold was set at $8.30 per day. [caption id="attachment_33210" align="alignnone" width="300"] @pip.worldbank.org[/caption] From Poverty to the Middle Class Over 15 years, Kazakhstan witnessed substantial economic growth. Per capita consumption doubled, and GDP per capita rose from 548,900 to 791,300 tenge (KZT). An estimated six million people were lifted out of poverty, and the country advanced into the category of upper-middle-income economies. The World Bank identifies three distinct phases of development: 2006-2013 - Growth: Economic expansion and proactive social policies reduced poverty from 49.5% to 11.1% 2014-2016 - Crisis: A sharp decline in oil prices and the devaluation of the tenge saw poverty spike to 20.2% 2016-2021 - Stabilization: Economic recovery brought the poverty rate down to 8.5% [caption id="attachment_33211" align="alignnone" width="300"] @worldbank.org[/caption] A Rising Middle Class Between 2006 and 2021, the share of Kazakhstan’s population considered middle class increased from 26 percent to 67 percent. The World Bank defines the middle class as individuals who are neither poor nor economically vulnerable. This growth was driven by rising incomes, pensions, and social assistance programs. However, progress began to slow after 2013 due to ongoing structural challenges, low productivity, dependence on extractive industries, and a weak private sector. Child Poverty: An Alarming Trend National gains have not eliminated regional disparities. In the Turkistan region, poverty rose from 14.4 percent in 2006 to 24 percent in 2021. [caption id="attachment_33212" align="alignnone" width="300"] @worldbank.org[/caption] Demographic shifts in poverty are also concerning. The poor are increasingly younger, less educated, and from large families. Child poverty is especially acute: 13% of children live below the poverty line, comprising 40% of the country's poor. In other words, every eighth child in Kazakhstan is living in poverty. [caption id="attachment_33213" align="alignnone" width="300"] @worldbank.org[/caption] Consumption and Inequality Rising consumption, measured via purchasing power parity (PPP), has been the main driver of poverty reduction. Indicators like the Big Mac Index offer accessible insights into shifts in purchasing power. Growth in incomes, pensions, and the small and medium-sized enterprise (SME) sector also contributed, while emergency government support during the COVID-19 pandemic helped avert a sharp decline in living standards. Nevertheless, inequality is on the rise. Since 2016, the Gini Index has shown a growing gap. The wealthiest 10% of Kazakhstanis now spend three times more than the poorest 10%. While this inequality remains moderate by global standards, the upward trend is cause for concern. [caption id="attachment_33214" align="alignnone" width="300"] @worldbank.org[/caption] Looking Ahead World Bank analysts acknowledge Kazakhstan’s progress in reducing poverty. However, they...

Hydropower

Dubai Hosts Talks on Major Central Asian Hydropower Project

On May 26-27, 2025, energy ministers from Kazakhstan, Kyrgyzstan, and Uzbekistan met in Dubai, United Arab Emirates, for the second high-level meeting on the Kambarata-1 Hydropower Plant (HPP) project. The meeting was organized with the support of the World Bank, according to Kyrgyzstan’s Ministry of Energy. Kambarata-1 is a flagship regional initiative designed to enhance energy security and water management across Central Asia. The planned hydropower facility, with a capacity of 1,860 megawatts, will be constructed on the Naryn River in Kyrgyzstan. The delegations were led by Energy Ministers Yerlan Akkenzhenov (Kazakhstan), Taalaibek Ibraev (Kyrgyzstan), and Jurabek Mirzamakhmudov (Uzbekistan). High-level representatives from the finance and water ministries of the three countries also participated. During the meeting, the ministers formally requested technical assistance from the World Bank. This includes an updated feasibility study, environmental and social impact assessments, and the development of a robust financial and commercial implementation model. The World Bank delegation featured several senior officials, including Tatiana Proskuryakova, Regional Director for Central Asia; Carolina Sánchez-Páramo, Director for Strategy and Operations in Europe and Central Asia (ECA); Charles Joseph Cormier, Regional Infrastructure Director for ECA; and Stephanie Gil, Program Leader for Energy. “We are pleased to support the governments of Kazakhstan, Kyrgyzstan, and Uzbekistan in advancing the Kambarata-1 project,” said Proskuryakova. “It will bring major economic and social benefits to the region.” The ministers reiterated their commitment to the project, describing it as a cornerstone of regional energy integration. Participants reviewed progress since the first roundtable in Tashkent in January 2025. Discussions focused on revised cost estimates, grid modernization needs, financing strategies, and the importance of strong environmental and social safeguards. Kazakhstan’s Yerlan Akkenzhenov highlighted the collaborative nature of the initiative: “Kazakhstan fully supports this project and will continue working closely with its regional partners.” Kyrgyzstan’s Taalaibek Ibraev underscored the national significance of the HPP: “This project is the foundation of Kyrgyzstan’s energy strategy. We are proud to implement it in partnership with Kazakhstan and Uzbekistan.” Uzbekistan’s Jurabek Mirzamakhmudov referenced the tangible progress already made: “With joint efforts and international backing, we are confident in our ability to realize this project according to global standards.” The ministers agreed on specific next steps and timelines for project preparation and pledged to hold regular meetings to ensure steady progress. As previously reported by The Times of Central Asia, the Kambarata-1 HPP will be located in the upper reaches of the Naryn River in Kyrgyzstan. Once completed, it is expected to generate approximately 5.6 billion kilowatt-hours of electricity annually. The estimated construction cost exceeds $4 billion.

Electricity

World Bank Approves $100 Million to Modernize Uzbekistan’s Power Grid

The World Bank has approved a $100 million credit to support the modernization of Uzbekistan’s electricity distribution system and facilitate the integration of renewable energy sources. Uzbekistan’s Regional Electric Power Networks (REPN) will contribute an additional $50 million to the initiative, marking the country’s first use of the World Bank’s Program-for-Results (PforR) financing model. Uzbekistan’s aging power distribution infrastructure poses serious challenges. Over 50% of the network is more than 30 years old and suffers from significant inefficiencies. As of 2024, technical issues contribute to the loss of approximately 13% of electricity, resulting in frequent outages across the country. The government has set a target of installing 25 gigawatts of renewable energy capacity by 2030. However, experts warn that without immediate upgrades to the national grid, Uzbekistan’s infrastructure will be unable to accommodate this expansion. In addition to technical improvements, the government is working to reduce commercial losses and enhance the financial viability of the electricity sector to attract private investment. Tatiana Proskuryakova, World Bank Country Director for Central Asia, highlighted the scale of the challenge. “The total investment needed is about $3 billion. We hope other development partners and private investors will join us in supporting REPN in this crucial effort,” she said. The combined $150 million from the World Bank and REPN will be deployed over the next five years to upgrade and expand infrastructure, particularly in regions such as Karakalpakstan and Surkhandarya. Planned improvements include: Construction or modernization of 6,000 kilometers of power lines Installation of 1,200 transformers Connection of 150,000 smart meters Deployment of 4,000 data concentrators to improve automation The program also aims to enhance REPN’s operational and financial management. It includes the development of advanced planning methodologies, strengthened financial oversight, and support for corporate governance reforms. By 2029, the initiative is expected to increase customer satisfaction, reduce annual CO₂ emissions by up to 450,000 tons, and raise the proportion of women in technical and leadership roles from 9% to 14%. Earlier this year, the World Bank also approved $153 million in support of a project aimed at reforestation and combating land degradation in Uzbekistan, as part of a broader regional climate resilience program.