9.6% Growth: World Bank Ranks Kyrgyzstan at the Top of Europe and Central Asia
Central Asia Column “Steppe Ahead”
The World Bank has raised its growth forecast for Kyrgyzstan by 3.5 percentage points to 9.6% for 2026. According to the new forecast, no other country in Europe and Central Asia is growing faster. The figure appears in the World Bank’s regional report dated October 6. Back in the spring, the Bank had projected growth of just 6.1% for the country. From January through August, the country’s economy had already grown by 11%.
3.5-point increase: Driven by consumption and government investment
In April, the World Bank had projected 6.1% growth for Kyrgyzstan. It now expects 9.6% for 2026 and 7.3% for 2027. The forecast for 2027 has also risen by 1.5 percentage points. The Kyrgyz news portal Kaktus.media reported on the new figures on October 6. The contrast with the region as a whole is striking. For Europe and Central Asia combined, the World Bank expects growth of only 2.2% in 2026, down from 2.6% the previous year. Central Asia remains the fastest-growing subregion at 5.8%. Uzbekistan follows in second place with 7.9%, behind Kyrgyzstan. Kazakhstan, Central Asia’s largest economy, is dragging down the subregion’s average. As early as April, the World Bank noted the stabilization of Kazakh oil production. According to the World Bank, the region as a whole is being held back by higher energy prices, increased uncertainty, and weak trading partners. Rising real wages, remittances, tourism, and public investment are providing a supportive effect. In Kyrgyzstan, the supportive factors clearly outweigh the negative ones. The World Bank cites strong private consumption as a key driver. This is complemented by higher government investment in transportation and energy. Construction is providing an additional boost. Preliminary work on the Kambar-Ata-1 hydroelectric power plant is underway, as are preparations for the China-Kyrgyzstan-Uzbekistan railway line.
11% Growth in Eight Months: The Data Supports the Optimism
From January through August, the Kyrgyz economy grew by 11%. Gross domestic product reached 1.39 trillion som, equivalent to approximately 15.9 billion U.S. dollars. Prime Minister Adylbek Kasymaliev cited these figures during a cabinet meeting in early October, as reported by the Azerbaijani news agency Trend. “The steady growth of the republic’s economy continues,” Kasymaliev said, according to the report. Kyrgyzstan had already grown by 11.1% in 2025. If this pace continues, the gross domestic product will reach approximately 2.09 trillion som for the first time in 2026. This corresponds to about 23.9 billion U.S. dollars, according to Trend’s calculations. The IMF describes the basis for the upswing in its April country report. According to the report, trade flows, remittances, capital inflows, and robust construction activity have been driving growth since 2022. The government is supporting the construction sector with high levels of spending. The wide range of forecasts is striking. The EBRD expects an 8.7% increase for 2026. In August, the Eurasian Development Bank even projected 10.2%, while the IMF most recently forecast only 6.1%. The regional news portal Times of Central Asia attributes this range to differing assumptions. The IMF factors in that the boost from re-export trade with China will subside. The development banks, on the other hand, are counting on sustained high levels of investment in industry, energy, and housing construction.
Inflation at 15%: The boom comes at a price
The downside of this rapid growth is rising prices. According to Kaktus.media, the National Bank of Kyrgyzstan expects inflation to reach around 15% by the end of the year. As early as April, the IMF saw signs of overheating: rapid credit growth, strong wage increases, and high liquidity. After three years of surpluses, the national budget is set to slip into deficit in 2026. The IMF cites higher public-sector wages and rising investment as the reasons. Added to this is the country’s dependence on its most important export commodity. “The heavy reliance on gold makes the economy vulnerable to fluctuations in commodity prices,” the IMF writes in its country report. If the price of gold falls, export revenues and foreign exchange reserves come under pressure at the same time. The IMF identifies trade as a second risk. Kyrgyzstan relies heavily on the re-export of Chinese goods to neighboring countries. If this flow reverses, a key driver of growth will be lost. The Fund therefore recommends taking precautionary measures: phasing out VAT exemptions, gradually reducing energy subsidies, and granting fewer subsidized loans through state-owned banks. The IMF rates the banking sector as stable and well-capitalized. However, the proportion of non-performing loans is high. Nevertheless, its top ranking in the region carries weight. Kyrgyzstan demonstrates that major projects such as Kambar-Ata-1 and the China Railway are already generating growth during the construction phase. The World Bank expects growth to slow to 7.3% by 2027. Even so, Kyrgyzstan would still be well ahead of the regional average. However, if inflation remains in the double digits, real incomes will shrink. In that case, the National Bank would have to raise interest rates further, and the boom would lose momentum.
Source: World Bank, Trend, IMF, Times of Central Asia (EN), Kaktus.media (RU)