The EDB: the Kyrgyz Republic expects economic growth influenced by short-term factors in 2019
The Macroeconomic Review prepared by the Directorate for Research at the Eurasian Development Bank (EDB) forecasts the Kyrgyz Republic’s medium-term economic growth at 3.5–3.9%.
Alexey Kuznetsov, Head of Economic Analysis at the EDB, notes that, after two years of economic recovery, GDP growth in the country slowed down to 3.5% in 2018, from 4.7% in 2017, primarily because of lower outputs at the Kumtor gold mine. The forecast for medium-term economic growth remains substantially unchanged compared to previous estimates made in December 2018.
“We at the EDB expect that the Kyrgyz GDP will expand by up to 4% in 2019, largely due to the optimistic forecast for gold production, as well as a moderate increase in demand by the public sector. The medium-term growth will be gradual, at levels close to forecasts,” Alexey Kuznetsov commented.
Against the background of low inflation, the National Bank of the Kyrgyz Republic reduced its key rate from 5.0% to 4.75% in 2018. The key objectives of the foreign exchange policy remained unchanged and this, in part, ensured stability in the domestic foreign exchange market despite highly volatile regional financial markets.
The review also points out that in 2018 inflation deviated from the target because of the weak price environment in the global food markets and the high base effect in the segments of vegetables and solid fuels.
The Bank’s analysts forecast inflation in 2019 to decrease to 2.1% (in December 2018, the indicator was expected to reach 5.6% by year-end). The figure has been adjusted for the expected regional food prices revised in late 2018 – early 2019.
The EDB believes that medium-term inflation will depend on global food markets. According to its forecast, global food prices will begin to recover during the first six months of 2019 and stabilise by early 2020, influencing the dynamics of the consumer price index in the Kyrgyz Republic.
Additional Information:
The Eurasian Development Bank (EDB) is an international financial institution founded by Russia and Kazakhstan in January 2006 with the mission to facilitate the development of market economies, sustainable economic growth, and the expansion of mutual trade and other economic ties in its member states. The EDB's charter capital totals US $7 billion. The member states of the Bank are the Republic of Armenia, the Republic of Belarus, the Republic of Kazakhstan, the Kyrgyz Republic, the Russian Federation, and the Republic of Tajikistan.
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