Kyrgyz Republic. Recent social and economic trends and short-term prospective. May 2020

16 June 2020

In 2019, the GDP growth was 4.5% compared to 3.8% a year earlier as a result of faster growth of exports of goods and services. An increase in production of base metals at the Kumtor field development enterprises led to accelerated export of gold. At the same time, exports excluding gold slowed down against the background of an almost twofold reduction in economic growth in Russia, accompanied by a decrease in demand. By December 2019, inflation accelerated to 3.1% from 0.5% a year earlier, remaining however below the targeted range of 5-7% set by the KR National Bank. In the context of low inflation, the KR National Bank maintained the expansionary nature of its monetary policy. The existing level of prices was mainly a result of an increase in food prices, which accelerated markedly in the second half of the year. The budget deficit fell to 0.1% of GDP down from 1.1% of GDP a year earlier on the back of an increase in state budget revenues as a result of growth in non-tax revenues and grants. Budget expenditures rose due to an increase in the wage bill and capital expenditures under the Public Investment Program. Despite a decline in the flow of remittances, an improvement in the trade balance resulted in a lower current account deficit. In 2020, the KR economy will be negatively affected by uncertainties related to the duration of the impact of external shocks on the local currency exchange rate, and the pace of recovery of the business activity and trade flows. The slowdown in global economic growth against the backdrop of the COVID-19 pandemic would weaken the domestic and external demand through the channels of trade, investment and remittances