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Gold mining sector loses role of driver of Kyrgyzstan’s economy

Following the results of August, the gold mining sector lost the role of the driver of the economy of Kyrgyzstan, which it has been executing for seven months of 2017. Monthly macro review of the Eurasian Development Bank says.

It was noted that as a result of the reduction in the output of basic metals by 15.5 percent compared to August 2016, the drop in production in the industrial sectors was 2.8 percent. After two months of near-zero dynamics, the agricultural sector once again began to make a positive contribution to the dynamics of economic growth.

«In all likelihood, in the remainder of the year, sources of growth will concentrate in the construction sector and retail trade. The positive dynamics of investments will compensate for the lack of a credit impulse, which, despite the restoration of credit growth, remains weak. Stable growth in the net inflow of remittances supports domestic consumer demand,» the report says.

The EDB forecasts that in the autumn-winter months of 2017 imports will play a key role in increasing foreign trade turnover. It was noted that the inflationary shock in the first half of the year was strengthened by increasing excise taxes on tobacco products as part of the equalization of taxes in EEU.

As a result, annual inflation accelerated from 0.5 percent in January to 4.1 percent in June.

The growth in the revenue part of the budget of Kyrgyzstan was mainly determined by the increase in the volume of grants received. Moderate growth rates of expenditures are caused by the high base of 2016.

According to preliminary estimates, in the seven months of 2017, the GDP growth of the Eurasian Economic Union was 1.8 percent. The Eurasian Economic Commission (EEC) noted that economic indicators were particularly high in Armenia and Kyrgyzstan.