Publication: Kyrgyz Republic Economic Update No. 8, Fall/Winter 2018: Weak Growth Despite Emerging Regional Opportunities
Date
2019-02-07
ISSN
Published
2019-02-07
Author(s)
World Bank Group
Abstract
Real GDP growth slowed to 3.1 percent in
January-November 2018 from 3.7 percent in the same period of
2017. This deceleration was the result of slower growth in
both gold production and non-gold industry. Export
performance remains weak, largely on account of a sharp
slowdown in gold exports, and in spite of trade
opportunities within the Eurasian Economic Union. Attracting
private investment remains a challenge. Recent developments
point to limited progress in addressing structural issues
over the past few years. While the Kyrgyz Republic was able
to avoid an external shock driven recession in 2014-15, the
economy remains vulnerable to external economic shocks given
its high dependence on an undiversified export base,
workers’ remittances, and foreign aid.The fiscal position
has improved with a strong tax revenue performance and cuts
to capital outlays. This has helped keeping public debt
under control following a sharp increase in 2014-15. With
inflation pressures low, the monetary policy stance remains
relaxed. The National Bank reduced its policy rate by 25
basis points to 4.75 percent in May 2018 to support economic
growth and has maintained a managed float of the exchange
rate.Going forward, real GDP growth is forecast to
accelerate slowly to 3.9 percent by 2020 supported by all
the major sectors – industry, agriculture, construction and
services. On the demand side, growth is projected to be
driven by private consumption, investment and exports. The
economy will continue to benefit from large remittance
inflows and firming external demand. Strong remittances will
support average consumption growth of around 3 percent in
2018–20. However, the current account deficit is projected
to remain elevated at about 9 percent of GDP, reflecting
structural constraints, the significant import content of
public investment, and an indirect feed-through effect of
remittances via imports. To rebuild fiscal buffers, the
authorities are committed to reducing the deficit to 3
percent of GDP by 2020.
Citation
“World Bank Group. 2019. Kyrgyz Republic Economic Update No. 8, Fall/Winter 2018: Weak Growth Despite Emerging Regional Opportunities. © World Bank, Washington, DC. http://hdl.handle.net/10986/31237 License: CC BY 3.0 IGO.”