Kyrgyzstan Economic Outlook
In the first quarter of 2023, the economy is likely losing some steam from last year’s stellar growth. In January, GDP expanded 4.8% year on year, down from the 7.0% registered in the previous month. The moderation came on the back of softer growth in the industrial, agricultural and construction sectors and nearly stagnating capital investment. More positively, retail trade growth accelerated; coupled with a lower unemployment rate, this indicates strong private spending. In addition, the volume of cargo transportation grew over 30% year on year, and foreign exports dropped at a milder rate, pointing to improving trade activity. Meanwhile, both Kyrgyz and Tajik officials have reported recent progress on border negotiations, suggesting the previous target for completing border delimitations of May 2023 may be met.
Inflation ticked up to 15.3% in January and moved further away from the Central Bank’s 5.0–7.0% target range (December: 14.7%). This prompted the Central Bank to keep its policy rate at 13.00% on 27 February. Our panel sees inflation slowing in 2023 on lower global price pressures. Higher domestic tariffs and elevated oil prices pose upside risks.