Kyrgyzstan's economy is projected to grow by 5.0% and 4.5% in 2024 and 2025 respectively, the Asian Development Bank (ADB) reports. Projected inflation rates are set to decelerate to 7% in 2024 and 6.5% in 2025, facilitated by an improved global food market and a reduction in domestic demand.
The principal drivers of growth during this period will be investment and private consumption, supported by increased household incomes stemming from a projected slowdown in inflation and robust remittances. ADB Country Director for the Kyrgyz Republic, Zheng Wu, indicates that external factors such as trade growth, which previously bolstered the economy, are expected to subside, thus aligning growth closer to its long-term average.
The Kyrgyz Republic's banking sector remains stable and robust, with banks maintaining a capital adequacy ratio of 24.8% and a liquidity ratio of 77.4% at the start of 2024. Improvements are noted in the decrease of nonperforming loans to 9.2% at the end of 2023 from 12.8% in 2022.
Central bank interventions in 2023, including significant foreign currency sales, helped stabilize the Kyrgyz som despite volatility in international markets. These actions, coupled with the strategic acquisition of domestically mined gold, increased gross reserves to $3.2 bn at the beginning of 2024.
Public expenditure is projected to moderate to 29.0% of GDP for 2024 and 2025, with allocations increasing for essential services such as health, education, and infrastructure development. The external debt is expected to decrease as a percentage of GDP with scheduled repayments estimated at $400 mn annually over the next few years.
Construction activities related to public housing will continue, although other infrastructure projects may see reduced growth rates. The narrowing of the current account deficit is anticipated due to increased gold exports and a slowdown in imports and re-exports.
Since its inclusion in the ADB in 1994, Kyrgyzstan has received support through 217 public sector loans, grants, and technical assistance initiatives totalling $2.6 bn. The ADB remains committed to enhancing agricultural efficiency and profitability in the region, notably through a recent $40 mn project aimed at developing climate-resilient agricultural value chains. This initiative focuses on improving market linkages and access to financing for agribusinesses.
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