BISHKEK, KYRGYZ REPUBLIC (6 April 2022) — The Kyrgyz Republic’s economy is expected to slow in 2022 and recover slightly in 2023 if external uncertainties are not prolonged, according to a new Asian Development Bank (ADB) report.
In its Asian Development Outlook (ADO) 2022, ADB forecasts the Kyrgyz Republic’s gross domestic product (GDP) growth to slow to 2% in 2022 with economic sanctions imposed on the Russian Federation, the country’s main trade partner. Growth is expected to recover to 2.5% in 2023. ADO is ADB’s flagship annual economic publication.
“After a return to growth last year, much of the outlook is now influenced by external uncertainties,” said ADB Country Director for the Kyrgyz Republic Kanokpan Lao-Araya. “Developing a greener economy can help to mitigate risks to sustainable development—ADB remains fully committed to supporting the Kyrgyz Republic’s economic development.”
Inflation is expected to remain high at about 15% in 2022 and 12% in 2023, mainly from a more than 20% surge in fuel and gas prices that may push up prices of food and other items. The central bank is expected to maintain its focus on price stability. Last month, it raised the policy rate and intervened in the currency markets to support the exchange rate when a sharp drop in the Russian ruble decreased the value of the Kyrgyz som against the United States (US) dollar.
The government is developing an anti-crisis action plan, which includes stimulus for the private sector and measures to diversify imports of essential goods.
Increased gold exports should boost export growth this year and next, while resuming delayed infrastructure projects should boost imports. Remittances are likely to fall in US dollar terms, reflecting lower demand for migrant workers and a weakened value of currencies against the US dollar.
ADO 2022 recommends continuing to develop a green economy to help drive sustainable growth, as this will significantly reduce risks to the environment, preserve natural ecosystems, and promote efficient resource use. This includes coordinating with private firms to provide incentives that would attract foreign direct investments in green technologies and encouraging firms to produce greener products.
Since 1994, ADB has committed more than $1.3 billion in loans, $811 million in grants, and $69 million in technical assistance for the Kyrgyz Republic. Last year, ADB approved $50.65 million to help procure battery-electric buses and enhance transport infrastructure; an $80 million policy-based lending program to support efforts to diversify the economy; $25 million to help procure and deploy coronavirus disease (COVID-19) vaccines; and a $35 million financing package to help reduce landslide risk in the Kyrgyz Republic.
ADB is committed to achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacific, while sustaining its efforts to eradicate extreme poverty. Established in 1966, it is owned by 68 members—49 from the region.