GDP of Kyrgyzstan is forecast to reach 3.5% until the end of 2021, the Asian Development Outlook 2021: Financing Green and Inclusive Recovery says.
Its growth may reach 5% in 2022, as restrictions associated with the coronavirus pandemic ease and economic activity recovers in the countries – main trading partners of Kyrgyzstan. The forecast may be worsened. It depends on recovery of economic activity in the sub-region and Russia.
“Gold production is expected to recover, as ore quality improves, and import-dependent industries such as manufacturing, construction and mining will benefit from opening of borders and resumption of work of supply chains. Trade, services and transport will also recover, as borders open, and agriculture will benefit from the regional economic recovery. But business activity will remain at a low level due to political instability right up to the parliamentary elections this fall,” the outlook says.
New waves of the coronavirus pandemic and a low level of vaccination against COVID-19 in the republic may undermine economic growth.
Private consumption should recover, as the volume of remittances to the country rises. At the same time, the rate of inflation in the Kyrgyz Republic is expected to accelerate to 7% in 2021 and 2022. The inflation rate in January-February rose to 10.4%. At the same time, food prices remained high due to the slow recovery of supply chains and depreciation of the national currency.
“The budget deficit is predicted to further increase to 4-5% of GDP, as ongoing spending on the fight against COVID-19 will continue through investments in health care, vaccination and other projects postponed from 2020. The government will continue to contain low priority spending while improving tax policy and administration,” the ADB predicts. (24.kg/Business World Magazine)
