2013年-世界发展银行全球_Kyrgyz_Republic_Economic_Report_October_2013___Growth_is_Back_Headwinds_Persist_32页_1mb

Kyrgyz Republic: Growth is Back, Headwinds Persist

Core Content Summary

The Kyrgyz Republic experienced a strong economic recovery in 2013, with real GDP growth reaching 8 percent year-on-year in the first eight months of the year, driven largely by the recovery of the Kumtor gold mine. Despite this growth, the economy faces several persistent challenges that could affect long-term stability and development.

Main Economic Developments

• Economic Growth:

  • The recovery of the Kumtor mine contributed significantly to growth, with gold production rebounding and manufacturing growth reaching 16.2 percent.
  • The non-gold economy also performed well, with construction and trade leading the way.
  • Tourism showed signs of improvement, supported by visa-free access for citizens from over 40 countries.
  • Private consumption and investment were key growth drivers, while government spending remained subdued due to tighter controls.
  • Exports began to recover, though they remained slightly below 2012 levels.
  • Imports grew rapidly, driven by domestic demand, leading to a worsening trade deficit and current account deficit.

• Inflation:

  • Domestic inflation was heavily influenced by global food and fuel prices.
  • Inflation slowed significantly in 2013, reaching 6.6 percent by August, compared to 6.5 percent in the second half of 2012.
  • Core inflation also eased to single-digit levels, down to 8.9 percent in August 2013.
  • The slowdown in inflation was attributed to lower import prices and reduced global food and fuel prices.

• External Accounts:

  • The current account deficit widened, reaching $2.4 billion in the first seven months of 2013.
  • Exports of gold, vegetables, and garments declined, while re-exports of consumer goods and kerosene increased.
  • The trade deficit was partially offset by services and private transfers.
  • Capital inflows, including FDI and foreign loans, were the main sources of financing for the current account deficit.
  • Gross external debt reached $6.3 billion, or 93.7 percent of GDP, but the high concessionality of public debt reduced sustainability concerns.

• Employment and Labor Markets:

  • The labor market remains dominated by the informal sector, with only about 60 percent of the population employed.
  • Unemployment rate was 8.4 percent in 2012, but registered employment increased slightly in 2013.
  • Real wages declined, with a 2.6 percent drop in the first seven months of 2013.
  • The public sector experienced minimal wage growth (0.6 percent), while the private sector saw a 9.4 percent increase.
  • The financial sector, transport, and industrial processing paid the highest wages, whereas agriculture, the largest employer, had the lowest.

• Poverty:

  • Poverty rates increased to 38 percent in 2012, up from 36.8 percent in 2011, reversing a trend of reduction since 2008.
  • The urban-rural poverty gap narrowed slightly, with urban poverty rising to 35.4 percent and rural poverty remaining stable at 39.6 percent.
  • Extreme poverty remained stable at 4.4 percent, but urban extreme poverty increased, while rural extreme poverty decreased.
  • The rise in poverty, despite increased social spending, suggests the need for a more effective delivery model of social services.

Key Challenges and Outlook

• Political Environment:

  • The government continues to navigate a complex political landscape, with the current coalition government being one of the longest-serving in recent years.
  • Political instability and corruption remain concerns, as reflected in the low public perception of government effectiveness and high corruption perceptions.
  • The Kumtor gold mine dispute with Centerra Gold is a major issue affecting investor confidence and the business environment.

• Macroeconomic Policies:

  • Fiscal policy improved, with the fiscal deficit falling to 0.5 percent of GDP in the first half of 2013, reflecting higher revenues and tighter spending control.
  • Monetary policy remained accommodative, supporting credit growth, but risks in the financial sector and inflationary pressures need to be managed.
  • The real effective exchange rate remained stable, and the National Bank of the Kyrgyz Republic (NBKR) intervened in the foreign exchange market once in over a year, allowing for some depreciation of the som against the US dollar.

• Outlook for 2014:

  • The baseline growth projection for 2014 is 6.5 percent, down from the 7.8 percent projected for 2013.
  • Risks to the external environment include a slowdown in Russia, a potential decline in gold prices, and the planned withdrawal of NATO troops from Afghanistan, which could impact regional stability.
  • Sustaining high growth will require significant institutional, physical, and human capital upgrades to develop a competitive private sector.

Conclusion

The Kyrgyz Republic has seen a return of economic growth in 2013, primarily driven by the recovery of the gold sector and strong private transfers. However, the economy remains vulnerable to external shocks, particularly from Russia and gold price fluctuations. The government needs to address structural issues, including improving the business environment, managing fiscal and monetary policies, and enhancing the efficiency of public spending to ensure long-term sustainable growth and poverty reduction.