Kyrgyzstan demonstrates the highest economic growth among the EAEU countries, despite the decline in gold production at Kumtor mine. Many sectors of the economy showed positive dynamics. However, part of the growth may be due to bringing business out of the shadows, which creates the illusion of more significant results. Economic expert Arsen Imankulov told to 24.kg news agency about this.
«Almost all sectors of the economy showed positive dynamics. It is worth noting that this year there was a planned reduction in gold production at Kumtor, which turned out to be one of the main restraining factors for the economy as a whole, and the mining sector in particular. It is worth noting: if the mining sector had shown a small increase, Kyrgyzstan could well have overcome the 10 percent threshold and achieved double-digit growth,» economic expert Arsen Imankulov said.
Economic indicators may be overstated due to the withdrawal of business from the shadows, which creates the illusion of growth associated with legalization of previously unaccounted data.
Arsen Imankulov
«I am far from giving an overly rosy assessment. In recent years, Kyrgyzstan has been going through significant transformation processes, which may slightly inflate the real economic indicators. It is important to remember that the country is still actively working on bringing business out of the shadows, and many positive indicators in different sectors may indicate not real growth, but the accounting of what was previously unaccounted. By way of example, the growth of nominal incomes of the population in Kyrgyzstan may be a consequence of both a real improvement of life and systematic measures by tax authorities and the government to legalize them,» he noted.
The expert added that the sanctions regime against Russia forced many of its traditional trade and economic partners to change supply routes.
«Of course, this affects Kyrgyzstan’s indicators, but is it systemic or temporary? Much will depend on the government of Kyrgyzstan here, how they can take advantage of this situation,» he emphasized.
Arsen Imankulov noted that one of the key growth factors is the active stimulation of capital expenditures by the government, which is confirmed by the indicators of the construction industry. According to him, the country’s economy is partially overheated, since a significant part of the budget is redirected to infrastructure projects.
«This is both good and risky. On the one hand, infrastructure projects have historically proven their effectiveness in stimulating economic growth — they support trade, production of construction materials and create jobs. But, on the other hand, this can lead to filing the economy with unsecured liquidity, which is fraught with increased inflation,» the expert explains.
Reliance on three key factors — servicing imports to the Russian Federation, investment in construction and bringing businesses out of the gray zone — is insufficient for long-term growth.
Arsen Imankulov
Nevertheless, in his opinion, the economy is showing high dynamism and movement, which opens up many opportunities.
«Further vector of development directly depends on the government’s ability to curb the flows and use their potential for the long-term development of the country,» the expert concluded.
