The European Bank for Reconstruction and Development (EBRD) has released its latest Regional Economic Prospects report, projecting a positive short-term economic outlook for Central Asia. The region is expected to achieve a growth rate of 5.1% in 2024, with an acceleration to 5.9% in 2025, driven by stronger commodity revenues, infrastructure investments, and ongoing market-oriented reforms.
Despite facing extreme weather conditions—such as severe flooding in Kazakhstan and livestock losses in Mongolia—Central Asian economies have demonstrated resilience and continued growth. Key contributors include sustained remittance inflows, rising wages, and an increased interest in international tourism, which have notably benefited the hospitality and services sectors in the first half of 2024.
The report highlights the authorities' commitment to enhancing transport, logistics, and energy infrastructure, which has positively impacted the region’s GDP figures. The Kyrgyz Republic and Tajikistan are particularly noted for their strong GDP growth performance.
In Kazakhstan, the trade, transport, warehousing, services, and information technology sectors have been pivotal for economic growth in the first half of the year. The EBRD forecasts Kazakhstan's economy will grow by 4.0% in 2024, with potential upside from public spending aimed at restoring flood-affected infrastructure and housing. In 2025, real GDP is anticipated to grow by 5.5%, bolstered by the planned expansion of the Tengiz oil field.
The Kyrgyz Republic is increasingly becoming a sought-after tourist destination, which is boosting the catering sector and transportation revenues. Elevated remittances and real wages are supporting growth in retail and wholesale trade. The EBRD projects a remarkable GDP growth of 9% in 2024, moderating slightly to 7% in 2025, driven by tourism expansion, infrastructure investment, and mineral exports, although secondary sanctions related to intermediated trade pose risks.
Mongolia faces challenges from extreme weather that resulted in significant livestock losses totaling 8.1mn heads, causing a contraction in its agricultural sector in the first half of 2024. Nevertheless, a surge in foreign tourists has stimulated growth in the hospitality, catering, food, and transportation sectors. The EBRD expects Mongolia’s GDP to grow by 5% in 2024 and by 8% in 2025, contingent on stronger-than-expected growth in China, which could enhance external demand. However, vulnerability to commodity price fluctuations and energy supply issues remains a concern.
In Tajikistan, increased public-sector salaries, pensions, and minimum wages have driven domestic demand, bolstering retail and wholesale trade. The resumption of precious metal exports, coupled with heightened public infrastructure spending and fixed capital investment, are major growth factors. The report projects Tajikistan’s GDP growth to reach 8% in 2024 and 7% in 2025, supported by strong domestic demand and infrastructure investment, though fluctuations in remittances from Russia present downside risks.
Turkmenistan has exhibited stability in its economy, with investments in public infrastructure, production facilities, and fixed capital playing crucial roles in its growth. The introduction of a new single-window system for export-import operations has enhanced customs efficiency and transit procedures, resulting in increased freight turnover and a growing transportation sector. The EBRD forecasts Turkmenistan’s economy to grow by 6.3% in both 2024 and 2025. However, potential weaknesses in Chinese economic growth could negatively impact demand for Turkmen gas.
Uzbekistan’s economic expansion is supported by a rise in remittances and increased tourist arrivals, with the services and industrial production sectors strengthening. The EBRD anticipates Uzbekistan’s economy will grow by 6.0% in both 2024 and 2025, driven by continued market-oriented reforms and infrastructure investments. Nonetheless, an energy deficit, which has led to increased mineral-fuel imports, could present challenges and limit growth opportunities.
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