2017年-世界发展银行全球_Kyrgyz_Republic_Economic_Update_No_6_FallWinter_2017___A_Robust_Recovery_with_Underlying_Weaknesses_29页_2mb

Kyrgyz Republic Economic Update Summary (Fall/Winter 2017)

Core Content

The Kyrgyz Republic experienced a robust economic recovery in 2017, driven by improved external conditions, expansionary fiscal policy, and strong gold production. Despite this growth, underlying structural weaknesses persist, particularly related to remittance dependence and labor migration.

Main Points

Economic Recovery

• Real GDP growth reached 5% in the first nine months of 2017, with a projected annual growth of 3.5%.
• Gold production was a key driver, growing by 18.3% y-o-y, contributing significantly to the overall recovery.
• Non-gold output grew at a slower pace, at 3.6% y-o-y, while agriculture and construction saw slower growth.
• Private consumption and net exports were the main contributors to growth, supported by rising remittances and increased gold exports.

Inflation Trends

• Inflation rose to 4% by end-November 2017, following a deflationary period in late 2016.
• Food and fuel prices saw the most significant increases, reflecting demand-side pressures from remittances and supply-side constraints in domestic agriculture.

External Sector

• Exports increased by 15% in USD terms in the first nine months of 2017, mainly due to gold exports and improved compliance with EEU standards.
• Imports rose by 8.1%, with notable increases from Russia, Uzbekistan, and South Korea.
• The trade deficit narrowed to 32.8% of GDP, down from 36.7% in 2016.
• The current account deficit also improved, decreasing to 7.6% of GDP, supported by remittances and FDI.

Financial Sector

• The banking system expanded, with nominal assets increasing by 6.9% y-o-y to 190.7 billion soms.
• Dollarization of loans and deposits slightly decreased, indicating improved confidence in the local currency.
• Banking stability indicators remained robust, with capital adequacy at 23.8% and liquidity ratio at 65.8%.
• Non-performing loans decreased slightly to 8.1%.

Social Sector

• Absolute poverty decreased to 25.6% in 2016, supported by low food prices and remittances.
• Growth was pro-poor, with the bottom 40% experiencing faster consumption growth (over 5%) than the general population (3%).
• Inequality declined, as the Gini coefficient dropped from 0.24 to 0.21.
• Agriculture and services remained the main employment sectors, with 36% of the bottom 40% employed in agriculture.

Key Policies and Challenges

Fiscal Policy

• The government maintained an expansionary fiscal stance, with a budget deficit of 4.4% of GDP in January–September 2017.
• Capital spending and election-related expenditures contributed to the fiscal deficit.
• Fiscal consolidation is expected, aiming to reduce the deficit to 3% of GDP by 2019 through tax increases and spending cuts.

Monetary Policy

• The National Bank of the Kyrgyz Republic (NBKR) kept interest rates unchanged, supporting private sector activity.
• Monetary base and money supply grew significantly, at 22.6% and 19.1% y-o-y, respectively.
• Exchange rate remained broadly stable, with a slight appreciation against the US dollar and tenge, but depreciated against the ruble.

Special Focus: Labor Migration and Remittances

Migration Trends

• The Kyrgyz Republic is the second most remittance-dependent country in the world.
• Migrants are predominantly young men, with many well-educated and employed in construction and unskilled services.
• Migration is driven by desperation, particularly in agriculture and construction, where underemployment is common.

Impacts of Migration and Remittances

• Remittances significantly boost domestic demand and private consumption, which in turn drives economic growth.
• However, remittance dependence can lead to Dutch Disease effects, causing real exchange rate appreciation and import growth outpacing export growth.
• Gold exports dominate the trade balance, while non-gold exports have improved due to EEU compliance.

Policy Options

• The report highlights the need for fiscal adjustment and policy coordination to address remittance-induced imbalances.
• Structural reforms are necessary to diversify the economy and reduce reliance on remittances.
• Improving competitiveness through product diversification and compliance with EEU standards is critical.

Risks and Outlook

• Growth is expected to recover to 4.2% in 2018, supported by increased remittances, recovery in Russia and Kazakhstan, and improved cross-border trade.
• Fiscal risks remain high due to continued expansion and high public debt.
• Exchange rate stability is crucial for export competitiveness, and the real effective exchange rate has depreciated by about 5% since 2016.
• Policy coordination is essential to ensure sustainable growth and reduce vulnerability to external shocks.

Conclusion

The Kyrgyz Republic has made significant progress in economic recovery, but remittance dependence and structural weaknesses remain key challenges. Fiscal consolidation, monetary policy adjustments, and improved compliance with EEU standards are necessary to ensure long-term stability and sustainable growth.