Kyrgyz economy to be more influenced by external factors - WB

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The World Bank forecasts a GDP growth of 4.5% for Kyrgyzstan in 2024, according to an updated economic outlook for developing countries in Europe and Central Asia, reports.

Previously, the World Bank expected the Kyrgyz economy to grow slightly lower, at 4% in 2024. The forecast for 2025 has also been revised upwards from 4% to 4.2%.

The World Bank noted that growth could be higher with the acceleration of structural reforms.

"It is expected that GDP growth will slow to 4.5% in 2024 due to a deceleration in the growth rate of the services sector. As for demand, consumption growth will slow down despite a slight increase in remittances, while investment and net exports are expected to support growth. In the medium term, annual GDP growth rates are expected to slow down due to the lack of structural reforms to increase potential growth," the World Bank forecasted.

Additionally, the World Bank believes that with a prudent monetary policy of the National Bank of the Kyrgyz Republic and stable prices for fuel and food in the global markets, inflation will decrease to the NBKR's target range of 5-7% by the end of this year. It is also expected to remain stable in the medium term.

It is forecasted that the budget surplus will turn into a deficit of 1.6% of GDP in 2024 due to a decrease in tax revenues. By 2026, this indicator may rise to 2.4% of GDP, mainly due to higher capital expenditures.

"There are external risks to growth, mainly due to the geopolitical situation and the state of trade flows with Russia. There may be a noticeable deterioration in the Russian economy, leading to a reduction in remittances and exports. Possible spikes in global food and fuel prices could reverse the trend and push inflation into double digits. Increasing the potential growth of the economy will require bold reforms to improve governance and reduce corruption, eliminate administrative barriers to private sector development, and improve the energy sector by adjusting tariffs," concluded the World Bank.

April 13, 2024