Expert: Sanctions on Russia have made Kyrgyzstan a key transit hub

Wednesday, June 25, 2025, 16:48 Is the GDP growth of the republic truly outpacing all countries in Central Asia and the EAEU? As of June 2025, Kyrgyzstan is showing the highest GDP growth rates among Central Asian and EAEU countries. According to official data, the economy grew by 12.3% in the first five months of the year, and by 11.7% from January to April. These figures far exceed forecasts from the IMF (6.7%), the Asian Development Bank (8.5%), and Trading Economics (5.0%), indicating strong momentum and high potential in Kyrgyzstan's economy, economist Iskender Sharsheev told Vesti.kg. “This growth is driven by both internal and external factors. After sanctions against Russia were introduced in 2022, Kyrgyzstan became a key transit hub for regional trade, especially toward Afghanistan. Fuel export volumes rose from 384,000 litres in 2022 to 40 million litres in 2024, and total exports to that country reached $50 million. Membership in the EAEU also gives an extra boost, allowing free movement of goods, services, and labour – particularly to Russia and Kazakhstan. Migrant remittances still make up about one-third of GDP, supporting consumer demand,” he said. Within the country, GDP growth is supported by dynamic development in key sectors. “In the first quarter of 2025, the food industry grew by 71%, the construction sector increased by 69%, and investments in fixed capital rose by 90%. The government is also actively implementing large infrastructure projects, including the Kambar-Ata-1 hydroelectric power plant and the China–Kyrgyzstan–Uzbekistan railway, making the country part of the Belt and Road Initiative. Demographic growth also contributes: in 2025 the population reached 7.3 million, increasing the labour force and consumer base,” the expert noted. The economic upswing is already having a noticeable effect on citizens’ living standards. Poverty, measured at the international threshold of $3.65 per day, fell from 7.1% in 2023 to 4.4% in 2024. “According to the UN's 2025 Human Development Report, multidimensional poverty in Kyrgyzstan has declined, especially in health, education, and adequate living conditions. The human development index adjusted for environmental factors exceeded the world average – 0.699 versus 0.680,” said Sharsheev. However, the expert pointed to ongoing challenges. “Inequality between urban and rural regions remains: in 2022–2023, urban poverty exceeded rural poverty. Moreover, economic dependence on external factors, especially Russia’s economy and remittances, creates vulnerability to external shocks. To ensure resilient results and fair distribution of growth benefits, structural reforms, a better business climate, and effective anti-corruption measures are needed,” explained the economist. Despite the favorable strategic position, flexible foreign trade, dynamic sectoral growth, and investment expansion, issues of social justice and economic stability in Kyrgyzstan remain. “Then real improvements in living standards for most Kyrgyz people will occur. Additional evidence is contained in the UN’s 2025 human development report, which shows progress in health, education, and access to basic services. Kyrgyzstan's human development index is 0.699, higher than the world average of 0.680. This indicates systemic improvements in citizens’ quality of life – including employment in construction and food processing, which reduced dependency on external labor migration. Although about one-third of the country’s GDP continues to come from migrant incomes from Kazakhstan and Russia. The population should continue shifting toward self-employment and entrepreneurship,” says the expert. Learn more: Vesti.kg article. https://vesti.kg/zxc/item/140376-ekspert-sanktsii-protiv-rossii-sdelali-kyrgyzstan-klyuchevym-tranzitnym-uzlom.html