In the face of recent natural disasters and regional challenges, Central Asian economies are projected to maintain growth throughout 2024 and 2025, according to the latest Regional Economic Prospects (REP) report released by the European Bank for Reconstruction and Development (EBRD).
Despite a temporary slowdown in 2024 due to severe floods in Kazakhstan and extreme cold weather in Mongolia, the region is expected to rebound, with growth rates reaching 5.9% in 2025. Kazakhstan, the largest economy in the region, is forecasted to expand by 5.5% in 2025, overcoming the setbacks experienced in the previous year.
Uzbekistan, another key player in the region, is poised to witness economic expansion, with GDP projected to grow by 6.5% in 2024 and 6.0% in 2025. This growth is fueled by factors such as rapid credit expansion, rising remittances, and international arrivals, along with ongoing tariff reforms aimed at reducing energy subsidies.
The REP report highlights the resilience of Central Asian economies in the face of adversity. Despite the challenges posed by natural disasters, the region has experienced substantial growth in publicly and privately financed investments in critical sectors such as transport, logistics, and export-oriented manufacturing.
Growth in wages and real incomes, coupled with technological advancements in consumer lending, has fueled a consumption boom in the region. Increased international arrivals and tourism have further bolstered economic activity, while intra-regional trade and cooperation have continued to strengthen.
However, the report also points out some challenges that lie ahead. Central to the public policy agendas of the region in 2024-25 is the urgent need for infrastructure improvements, implementation of politically sensitive tariff reforms, and efforts to reach regional agreements on shared resources like transport, water, and energy.
In Kazakhstan, while GDP growth is expected to be supported by an expansion in non-oil sectors in 2024, the full impact of severe floods remains to be assessed. The government's elevated spending is anticipated to mitigate the effects on aggregate demand, with GDP forecasted to grow by 4.5% in 2024 and 5.5% in 2025.
Similarly, in Uzbekistan, ongoing tariff reforms are expected to contribute to economic growth by reducing public expenditures. However, challenges related to chronic energy and water deficits may constrain growth despite the positive outlook.
According to the REP report, Kazakhstan’s economy is expected to expand by 5.5% in 2025 despite a temporary slowdown in 2024, with GDP growth forecasted to be 4.5% in 2024. Uzbekistan’s GDP is projected to expand by 6.5% in 2024 and 6.0% in 2025. The report anticipates growth rates reaching 5.9% in 2025 for Central Asian economies, following a temporary slowdown to 5.4% in 2024.
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