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September results. Gold mining keeps Kyrgyzstan’s economy afloat

Following the results of the third quarter, the GDP growth in Kyrgyzstan remains high — 6.2 percent. However, the growth rate is slowing down for the second month in a row, and data on it, taking into account gold and without it, differ almost two times.

There is growth, but not significant

The economy is growing rapidly this year. However, it is not a cause to rejoice. Such indicators are associated only with a significant increase in gold production. Experts warned in August that the low base effect had been exhausted and economic growth would begin to slow down by the end of the year.

Compared to August, GDP growth slowed down by 0.1 percent.

 According to the results of January — September 2019, the GDP of Kyrgyzstan amounted to 398,393 billion soms. Compared to 2018, it grew by 6.1 percent.

The National Statistical Committee noted that GDP growth was provided mainly by industry, construction, agriculture and the services sector. The growth of commodity production sectors compared to January — September 2018 amounted to 10.2 percent, the services sector — 2.7 percent.

If you look at the situation in the economy without taking gold into account, it is a little different.

According to the results of January — September 2019, GDP rate, excluding enterprises for development of Kumtor mine, amounted to 355,793 billion soms. This is only 3.2 percent more than in 2018.

In August, the economy excluding gold grew by 0.2 percent.

 Service industries take the largest share in the structure of GDP (44.6 percent), which decreased by 1.3 percent compared to the same period in 2018.

The share of industries producing goods increased by 2.6 percent and amounted to 41.2 percent of GDP. The share of industry amounted to 20.4 percent, which is 2.2 percent higher than in the same period of 2018, construction — 7.4 percent and 0.4 percent higher.

Country extracts metals, ores and oil

Growth is also slowing down in industrial production. But indicators still remain one of the highest in the last 3-4 years. But gold plays the main role here.

In January — September 2019, Kyrgyzstan has produced industrial products for 196,199.6 billion soms. This is 16.5 percent more than in 2018. It is the effect of a low base. The closer to the end of the year, the more modest the growth.

Industrial production growth slowed down by 0.5 percent in September.

 According to the National Statistical Committee, the growth is due to an increase in the production of base metals, textile production, metal ore, crude oil and gas, chemical production and coal production.

At the same time, the production of petroleum products (by 48.5 percent), pharmaceutical products (by 13.5 percent), rubber and plastic products (by 4.5 percent) decreased.

Without enterprises developing Kumtor, the volume of production amounted to 104,458 billion soms and decreased by 1.5 percent compared to 2018. Moreover, compared with August, the decline slowed down by 0.5 percent.

Potatoes and monthly fees go up

Since the beginning of the year, prices and tariffs in the republic as a whole have increased by 0.6 percent. The cost of food and non-alcoholic beverages grew by 1.2 percent, tariffs for services — by 0.4 percent.

Along with this, since the beginning of the year, prices for non-food products decreased by 0.8 percent.

In January — September, prices and tariffs growth was observed throughout the republic with the exception of Talas region, where prices fell by 0.2 percent, and Osh — by 0.7 percent.

Prices rose most of all in Issyk-Kul region. Alcoholic beverages and tobacco products (by 4.6 percent), as well as non-food products (by 1.1 percent) rose in price there. The maximum increase in prices for food products and non-alcoholic beverages was observed in Batken region (4.7 percent), for services tariffs — in Naryn region (2.8 percent).

Salaries are growing in construction sector

According to the National Statistical Committee, an average salary in Kyrgyzstan reached 16,451 soms.

An increase in the average monthly accrued salary was observed at enterprises and organizations of all types of economic activity, with the exception of enterprises and organizations in the field of information and communication, as well as transportation and storage of goods.

According to the results of the second quarter of 2019, the cost of living in Kyrgyzstan amounted to 4,739.7 soms, for pensioners — 4,224.81 soms.

Investments will support economy

«September GDP data are in line with EDB estimates — economic activity is slowing down. After three quarters of high growth, gold production at Kumtor began to decline since August 2019,» Analyst at the Economic Analysis Department of the Eurasian Development Bank Aigul Berdigulova commented to 24.kg news agency.

According to her, the exhaustion of the low base effect in the gold sector will continue in the next months of 2019. As a result, this will lead to a further slowdown in economic growth.

The economy will be supported by investments and domestic consumer demand.

Aigul Berdigulova

 «Inflation is accelerating, but remains below the target of the National Bank of Kyrgyzstan at 5-7 percent. In September 2019, consumer price growth increased to 2.3 percent (2 percent a month earlier). Food inflation rate continued to grow amid rising grain import prices. The limited supply of potatoes (a year earlier — overproduction) contributed to a growth in prices of fruits and vegetables. Rise in prices for alcoholic beverages and tobacco has an additional impact on inflation,» Aigul Berdigulova said.