The strategic role of Central Asia in the vast Eurasian space will increase, including the growing importance of the region for its closest neighbors and key economic partners — Russia and China. The report of the Eurasian Development Bank (EDB) «The Economy of Central Asia: A Fresh Perspective» says.
EDB analysts studied the characteristics of the region’s countries, their prospects for cooperation and their development potential. The states have established themselves economically and have wide-ranging growth potential.
Central Asia’s aggregate GDP totals $347 billion. Over the past two decades this has increased by a factor of 7.5.
Since 2000, the region’s share of global GDP at purchasing power parity has grown by 1.8 times. Its population of 77 million has increased by a factor of 1.4 since 2000, forming a capacious sales market and an expanding pool of labour resources. Demographic data suggest that the workforce will continue to grow in the future.
«The region’s countries have a historic opportunity to take advantage of their transit potential and to approach external markets through their emerging international transport corridors. Coordinated development of the water and energy complex, including green energy, also present significant opportunities for growth. Integration initiatives have significant potential to stimulate economic growth, with infrastructure integration being especially important,» EDB analysts note.
The lack of openness of some of the countries, their remoteness from major economic centres and the fact that countries have no access to the world ocean continue to affect international investors’ perception of the region.
Experts believe that sustainable development in Central Asia requires a balanced approach to attracting external funding — through strengthening and promoting good relations between the region’s countries and implementing the regional programmes of international organisations and development banks.
«Despite the progress, there are still problems that hinder the socio-economic development of Central Asian countries. Commodity exports and migrant workers’ remittances continue to play a major role in the region’s economies. Other significant issues include the quality of the institutional environment, bottlenecks in regional transport networks, social issues, macroeconomic risks and insufficient harmonisation in regional trade and economic relations,» the report says.
The region’s countries need to overcome four key structural challenges: lack of access to the sea, resource dependence and the low level of development of the financial sector, lack of coordination in management of the water and energy complex, and climate change.
EDB researchers believe that, through concerted effort, Central Asian countries will overcome structural development problems.
Increasing pressure on the energy system during a period of strong economic growth and the fact that the countries share river basins leave little option other than to cooperate in water and energy. Equally important are coordinated efforts to develop transport infrastructure and combat climate risk. Eliminating infrastructure bottlenecks will help to promote economic productivity, trade and economic partnerships with neighbouring countries, and encourage diversification of production and exports.
