The Eurasian Fund for Stabilization and Development (EFSD) has prepared the next Regional Economic Outlook, which presents an analysis of current trends and medium-term development prospects for the fund’s member states in the context of the main trends in the global economy. As part of the medium-term forecast presented in the report, the main risks and challenges for the macroeconomic sustainability of the EFSD member states are also discussed.
In the first quarter of 2024, the economy of the Kyrgyz Republic continued to grow at a high rate, accelerating compared to 2023, experts say.
Real GDP increased by 8.8 percent, mainly due to strong consumer and investment activity. The largest contribution to the growth was provided by the services sector (8 percent), including thanks to wholesale and retail trade, which grew by 19.1 percent.
Increased activity in the services sector contributed to employment growth. The slowdown in food price growth played a key role in reducing inflation to 5.2 from 7.3 percent according to 2023 results.
Monetary policy was aimed at limiting the monetary factors of inflation: the real discount rate remained positive (5.8 percent per annum), operations were carried out to withdraw excess liquidity from the banking system.
The growth of consumer lending is beginning to negatively affect the financial performance of banks: the volume of overdue loans increased by 8 percent at the beginning of the year. The state budget generated a surplus of 3.7 percent of GDP against the backdrop of growing tax revenues.
Despite the recovery in gold exports, the current account positions deficit continued to expand due to increased import volumes and under-accounting of re-export transactions. In the medium term, a slowdown in the growth rate of the Kyrgyz economy is expected due to a decrease in public investment and a gradual slowdown in domestic and external demand.
The slowdown in consumer activity and world food prices will lead to a decrease in annual inflation to 5.9 percent in 2024 and 5.4 percent in 2026.
