The Kyrgyz Republic’s economy is expected to grow moderately in 2023 and 2024 as uncertainty increases, according to a new report from the Asian Development Bank (ADB).
In its Asian Development Outlook (ADO) As of April 2023, the ADB projects growth in the Kyrgyz Republic to slow to 4.5% in 2023 and 4% in 2024. Geopolitical events may weigh on growth and inflation through remittances, exchange rate fluctuations and trade and financial linkages. ADO is the main economic publication of the ADB.
“While the Kyrgyz Republic enjoyed accelerated growth of 7.0% in 2022 following a rebound in gold production and strong domestic demand, much of the outlook is now influenced by increased uncertainty,” said the director of the ADB for the Kyrgyz Republic, Kanokpan Lao-Araya.
“Growth and inflation are expected to be moderate during the forecast period, with the inflow of external funds declining and less favorable conditions in trading partners. ADB remains fully committed to supporting the economic development of the Kyrgyz Republic .”
Inflation is expected to slow to 12.0% in 2023 and 8.6% in 2024, reflecting the likely moderation in imported food and energy prices and as demand declines.
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The fiscal deficit is projected to rise to an average of 2.5% of gross domestic product (GDP) in 2023 and 2024, despite what is expected to be an increase in revenue thanks to improved fiscal administration and customs The current account deficit is expected to narrow in 2023 and 2024 as gold exports resume and global energy and food prices moderate.
According to the ADO of April 2023, the current pension system could be further improved, for example, by decreasing its dependence on the State budget and reducing the dependency ratio of the system. The Kyrgyz Republic spends around 9.0% of GDP on its pension system despite having a relatively young population.
It is encouraging that the Government has developed several initiatives to face the new challenges. Further reform to encourage greater participation and compliance would reduce costs for the private sector and the financial burden on the state budget, freeing up public funds to invest in people and infrastructure for more sustainable growth. The government could do more to address the issue of pension adequacy, as this could reduce or even eliminate poverty among the elderly, the report suggests.
Since 1994, the ADB has committed more than $1.5 billion in loans, $947 million in grants, and $74 million in technical assistance to the Kyrgyz Republic.
Last year, the ADB approved $170 million to support the development of a number of sectors in the Kyrgyz Republic, including promoting trade, strengthening health and education, and supporting food security.
