Kyrgyzstan Economic Forecast

Last year, the economy performed well thanks to increased trade with, and labor supply and remittances from, Russia. Turning to the first quarter of 2023, GDP growth likely lost some steam. In January–March, economic activity expanded 4.6% year on year, down from the 7.0% growth tallied in January–December 2022. The moderation came on the back of lackluster expansions in the agricultural, industrial and construction sectors, as well as softer growth in cargo transportation volumes. In addition, weaker imports growth points to milder trading activity. That said, retail trade and capital investment growth accelerated. In other news, the anti-corruption and human rights ombudswoman was fired in May after her report described a declining human rights situation. This bodes poorly for transparency and the business environment in the country.

Inflation declined to 12.7% in March (February: 16.2%), moving closer to the Central Bank’s 5.0–7.0% target range. Meanwhile, the Central Bank kept its policy rate at 13.00% on 25 April. Our panelists anticipate inflation easing from current levels this year due to lower global price pressures. Higher domestic tariffs and commodity price swings pose risks.