ADB says Kyrgyzstan's GDP to grow in 2014
By Aynur Jafarova
The Asian Development Bank (ADB) forecasts Kyrgyzstan's GDP will grow by 6.5 percent in 2014 and 5.5 percent in 2015.
This estimate assumes that gold production remains stable and that investments in energy and transport infrastructure projects, mainly from Russia and China, materialize as expected," the bank said in its recently published report.
ADB noted the government expenditures will remain a driver of economic activity amid gradual recovery in the private sector.
"Higher domestic demand, encouraged by greater political stability and an improved investment climate, should spur growth in the private sector unconnected to gold. Growth is expected to stabilize at about 5 percent in the medium term, supported by infrastructure investments and continued increases in credit," the report noted.
The bank also said services will remain the major source of growth, expanding by more than 5 percent annually.
"Transportation and communications should perform well as major road networks and energy infrastructure is rehabilitated and communication networks are expanded. Industry is expected to grow by about 10 percent annually, with metals and metallurgy being the main drivers and gold remaining the principal output," the report noted.
ADB expects Kyrgyzstan's average annual inflation will stay within 6-7 percent during 2014-2015.
"The fiscal deficit is forecast at 4 percent of GDP in 2014 and 3 percent in 2015. This is despite the closure of the military transit center at Manas Airport in July 2014, as operations wind down in Afghanistan and the consequent loss of rental revenue worth $60 million in 2014 and an annual $120 million thereafter," the bank stressed.
Revenue is expected to reach 30 percent of GDP in 2014 and 31 percent in 2015, as improving tax administration remains high on the government's agenda, ADB said.
"Expenditure is projected at 35 percent of GDP in 2014 and 34 percent in 2015, reflecting higher capital spending and somewhat lower current outlays," the report said.
Also, exports are forecast to grow by about 8 percent in 2014 and 2015, mainly from higher gold exports by volume.
"However, falling gold prices and expected weaker demand, mainly for textiles, food, and machinery in Russia and other markets in the Commonwealth of Independent States (CIS), may worsen the trade outlook," ADB said. "Imports are expected to grow steadily, by about 10 percent in both 2014 and 2015, because of new infrastructure projects."
Inflows of foreign direct investment will depend largely on the government implementing its proposed structural reforms and improvements to the investment climate. External reserves are forecast to climb to $2.3 billion in 2014 and $2.4 billion in 2015.