The World Bank has predicted a 4.5% growth in Kyrgyzstan's GDP in 2024, according to the updated economic forecast for developing countries in Europe and Central Asia. This marks an increase from the previous expectation of 4% growth for the year, with the 2025 forecast also revised upward to 4.2%.
The World Bank has emphasized that this growth could be higher with accelerated structural reforms. However, a slowdown in GDP growth to 4.5% in 2024 is anticipated due to a deceleration in the service sector growth. Consumption growth is expected to slow down, despite a slight increase in remittances, while investments and net exports are projected to support growth.
In the medium term, an annual slowdown in GDP growth rates is expected due to the lack of structural reforms to enhance potential growth. The World Bank also believes that with a prudent monetary policy by the National Bank and stable global prices for fuel and food, inflation in Kyrgyzstan will decrease to the National Bank's target range of 5-7% by the end of this year and remain stable in the medium term.
Furthermore, it is forecasted that the budget surplus will turn into a deficit of 1.6% of GDP in 2024 due to declining tax revenues, potentially rising to 2.4% of GDP by 2026 primarily due to higher capital expenditures. External risks to growth exist, mainly driven by geopolitical tensions and trade flows with Russia.
The World Bank warns of potential disruptions caused by a deteriorating Russian economy leading to reduced remittances and exports. Sharp increases in global food and fuel prices could trigger inflation spikes. To boost economic growth potential, bold reforms are needed to improve governance, combat corruption, remove administrative barriers hindering private sector development, and enhance the energy sector through tariff adjustments, as highlighted by the World Bank.
