World Bank’s forecast of GDP slowdown in Kyrgyzstan has not come true, expert says

Denis Berdakov

BISHKEK: A prediction by the World Bank in April 2022 of a slowdown in the Kyrgyz economy due to the situation in Ukraine has turned out to be erroneous – the country’s GDP has, on the contrary, risen significantly, an expert has said.

“Indeed, a year ago, the World Bank predicted a decline in GDP by 5% and inflation of 18% in Kyrgyzstan,” Denis Berdakov has said, quoted by vesti.kg.

“But at the end of 2022, we saw that the forecast was, to put it mildly, erroneous. In fact, our GDP growth was 7%, and if we take into account the “shadow economy”, then we can say that the growth is under 9%.

Inflation in Kyrgyzstan’s commodity items, as in other countries, was observed, but in general it does not reach 18%.

“At the same time, we also see an acceleration of investments, and from very different countries, mainly Turkiye, Russia, and China,” he said.

The expert believes that the authorities of the republic have seriously taken up the collection of taxes and customs duties.

Thanks to improved administration, digitalization and the fight against corruption, a lot has been brought out of the shadows, he added.

“The Cabinet of Ministers has repeatedly reported that taxes have been collected much better from businesses and entrepreneurs. Therefore, schools, roads and other things are being built and reconstructed,” Berdakov said.

“Last year, the Cabinet of Ministers was able to seriously increase the salaries of civil servants. This is all due to several important reasons, such as the return of Kumtor, which gave many times more money to the budget than it did before. Plus, the improvement of administration in the customs and tax systems has had a good effect.”

The tax service collects about the same amount per month as it previously did per year, he added.

“The trade turnover with Turkiye and especially with China is increasing, and the growth is 30-40%. And since corruption has been squeezed in many ways, we receive more fees to the state budget,” he said.

An additional factor, according to Berdakov, was the fact that there is a serious transfer of investments from different countries to Kyrgyzstan, since Central Asia is becoming a new trade and logistics route in “Greater Eurasia” – from China to Iran and Turkiye.

“Therefore, despite the World Bank’s forecast for 2022, we finished it much better. And it certainly was not easy. The current government and President Sadyr Zhaparov have made considerable efforts to boost the economy, which includes the fight against corruption. If you look at the work of the State Committee on National Security, we see the disclosure of dozens of corruption schemes in all areas, including healthcare, education, architecture,” Berdakov said.

Socio-political security has expanded in the country and the lack of stability in Kyrgyzstan in recent decades has changed positively, he added.

“Whenever there is stability and predictability of the government, investors will be attracted and businesses will start investing more thanks to better tax administration. Everyone needs a stable zone, a protected growth zone,” Berdakov said.