Kyrgyzstan's economy is growing by 11.0%; inflation stands at 11.7%
Kyrgyzstan's economy grew by 11.0% from January through August. Gross domestic product reached 1,396.8 billion som, or about 15.9 billion U.S. dollars, according to the National Statistics Committee. Goods production rose by 18.6%, while services grew by 6.3%.
Construction and Industry Gain Ground
The share of services in GDP fell to 49.2%, which is 3.6 percentage points less than in the same period last year. Goods production accounted for 34.7% and gained 2.7 percentage points. Of this, 2.0 percentage points were attributable to construction and 1.2 percentage points to industry. Agriculture lost 0.5 percentage points.
At its meeting on October 1, the Cabinet of Ministers described the result as “continued steady growth of the republic’s economy,” according to the English version of the statement. Cabinet Chief Adylbek Kasymaliev cited the 11% growth rate for the first eight months. The National Development Program aims for 8% real annual growth by 2030, as reported by the Trend news agency.
High inflation, high key interest rate
Prices are rising faster than economic growth: The National Bank of Kyrgyzstan (NBKR) reported an annual inflation rate of 11.7% at its meeting on August 24. Since the beginning of the year, consumer prices have risen by 7.3%. Services became 11.1% more expensive, food 6.3%, and other goods 5.8%. Fuel prices are a major driver of inflation.
The NBKR kept the discount rate at 12%. The real interest rate is thus close to zero. The bank justified its decision as follows: “external conditions remain the main factor influencing price trends.” The next meeting is scheduled for October 26.
Imports Exceed Exports by a Factor of Five
From January through July, foreign trade grew by 7.7% to $10.0 billion. Imports rose by 8.7% to $8.3 billion. Exports increased by only 2.7% to $1.7 billion. Kyrgyzstan’s trade with the member states of the Eurasian Economic Union totaled $3.7 billion, an increase of 5.4%. Exports to these countries, however, fell by 2.0%. Trade with third countries grew by 9.1% to $6.3 billion.
For German exporters and investors, this means: Kyrgyzstan is growing strongly and importing heavily; the country meets a large portion of its needs through imports. Suppliers must factor in payment risks in som and inflation. For shipments via the Eurasian Economic Union, sanctions compliance takes priority; end users and transport routes must be verified before any contract is signed. Investors will find opportunities in construction and industry, which are driving this growth.
Sources: National Statistics Committee of Kyrgyzstan via Kabar and Akchabar (EN), National Bank of Kyrgyzstan (NBKR) (EN), Cabinet of the Kyrgyz Republic via Trend (EN)
SK, Frankfurt