Some good news for Kyrgyzstan, maybe

Dec 09, 2015, 12:02 PM EST
A truck in Bishkek, Kyrgyzstan.
Thomas Depenbusch/flickr

"Kyrgyzstan may become a starting point for development of the international transport corridor in the region," said Sergey Kruglov, president of parcel delivery service DPD in Russia and central Asia, on Tuesday. The country's favorable geographical position, located on the Great Silk Road, makes it of interest to China, and its underserved domestic population of 6 million is itself an enticing market opportunity.

"To support the business, we have organized delivery throughout the E.E.U.,” Kruglov continued, referring to the Eurasian Economic Union, of which Kyrgyzstan became the latest member in May, joining Russia, Belarus, Kazakhstan, and Armenia. The bloc, launched at the beginning of the year, aims to ensure the free movement of goods, services, capital, and labor within its borders. Kruglov noted that the volume of transport operations is increasing year to year, and drew a parallel between Kyrgyzstan’s expected development and that which Belarus has experienced. He singled out light industry in particular, saying “This means that there will be a bulk of parcels from Kyrgyzstan."

And Kyrgyzstan could use some good news, as the last month in particular has been awful. The country was hit by several medium-strength earthquakes, as well as two large ones of magnitude 7 or slightly above on the Richter scale. For example, the magnitude 7 earthquake that hit the south of Kyrgyzstan on November 17-18 damaged several thousand homes in this already-impoverished nation.

The quakes have further put the brakes on the country’s economy, which was already slowing down. According to the National Statistics Committee (NSC), from January through October, cumulative GDP growth was 4.8%, but when calculating from January through November it dipped to 3.6% (reaching $4.9 billion total). This was due in large part to drops in the price and production of precious metals -- gold accounts for 47.9% of Kyrgyzstan’s total exports, and production of precious metals decreased by 54.7% this year. Even though gold exports (extracted by foreign mining firms) increased, overall the country’s foreign trade decreased by 23.1% since the beginning of the year, the NSC reported on Wednesday.

“The slowdown in the economy, the depreciation of national currencies in the region, the decline in gold prices and a reduction in remittances led to lower economic growth, foreign trade and worsened the budget balance while debt sustainability weakened. Elections in October have also resulted in a deterioration of the budget," said IMF Deputy Managing Director and Acting Chair Min Zhu this week. Fiscal consolidation is planned for next year, which means lean times are expected in state expenditures and investments. And on December 1 the Seismology Institute of the National Academy of Sciences predicted that the beginning of 2016 will be “quite seismically active,” although “by the mid-year the seismic tension will subside.”  

However, if the country gets through the rocky stretch ahead, it may cash in on its crossroads location between the rest of the E.E.U. and China.