Economy of Kyrgyzstan

The economy of Kyrgyzstan was severely affected by the collapse of the Soviet trading block. In 1990, some 98% of Kyrgyz exports went to other parts of the Soviet Union. Thus, the nation's economic performance in the early 1990s was worse than any other former Soviet republic except war-torn Armenia, Azerbaijan, and Tajikistan. While economic performance has improved in the last few years, difficulties remain in securing adequate fiscal revenues and providing an adequate social safety net.

Macro-economic trend

This is a chart of trend of gross domestic product of Kyrgyzstan at market prices [http://www.imf.org/external/pubs/ft/weo/2006/01/data/dbcselm.cfm?G=2001 estimated] by the International Monetary Fund and EconStats with figures in millions of Kyrgyzstani Soms.

For purchasing power parity comparisons, the US Dollar is exchanged at 9.40 Soms only.

[http://earthtrends.wri.org/text/economics-business/variable-638.html Current GDP per capita] of Kyrgyzstan shrank by 54% in the Nineties. Average wages in 2007 hover around $3-4 per day.

Finance

Industries

Agriculture

Agriculture remains a vital part of Kyrgyzstan’s economy and a refuge for workers displaced from industry. Subsistence farming has increased in the early 2000s. After sharp reductions in the early 1990s, by the early 2000s agricultural production was approaching 1991 levels. Grain production in the lower valleys and livestock grazing on upland pastures occupy the largest share of the agricultural workforce. Farmers are shifting to grain and away from cotton and tobacco. Other important products are dairy products, hay, animal feed, potatoes, vegetables, and sugar beets. Agricultural output comes from private household plots (55 percent of the total), private farms (40 percent), and state farms (5 percent). Further expansion of the sector depends on banking reform to increase investment, and on market reform to streamline the distribution of inputs. Land reform, a controversial issue in Kyrgyzstan, has proceeded very slowly since initial legislation in 1998. [http://lcweb2.loc.gov/frd/cs/profiles/Kyrgyzstan.pdf Kyrgyzstan country profile] . Library of Congress Federal Research Division (January 2007). "This article incorporates text from this source, which is in the public domain.] The irrigation infrastructure is in poor condition. Agriculture contributes about one-third of the GDP and more than one-third of employment.Fact|date=March 2008

Forestry

Only 4 percent of Kyrgyzstan is classified as forested. All of that area is state-owned, and none is classified as available for wood supply. The main commercial product of the forests is walnuts.

Fishing

Kyrgyzstan does not have a significant fishing industry. In 2002 aquaculture contributed 66 percent of the country’s total output of 142 metric tons of fish, but in 2003 the aquaculture industry collapsed, producing only 12 of the country’s total of 26 metric tons.

Mining and minerals

In the post-Soviet era, mining has been an increasingly important economic activity. The Kumtor Gold Mine, which opened in 1997, is based on one of the largest gold deposits in the world. Several other gold deposits have been developed slowly, and the closing of Kumtor—expected by 2010—will deplete the contribution of the mining sector to gross domestic product. New gold mines are planned at Jerooy and Taldy–Bulak, and a major gold discovery was announced at Tokhtonysay in late 2006. The state agency Kyrgyzaltyn owns all mines, many of which are operated as joint ventures with foreign companies. Uranium and antimony, important mineral outputs of the Soviet era, no longer are produced in significant amounts. Although between 1992 and 2003 coal output dropped from about 2.4 million tons to 411,000 tons, the government plans to increase exploitation of Kyrgyzstan’s considerable remaining deposits (estimated at 2.5 billion tons) in order to reduce dependency on foreign energy sources. A particular target of this policy is the Kara–Keche deposit in northern Kyrgyzstan, whose annual output capability is estimated at between 500,000 and 1 million tons. The small domestic output of oil and natural gas does not meet national needs.

Industry and manufacturing

In the post-Soviet era, Kyrgyzstan’s industries suffered sharp reductions in productivity because the supply of raw materials and fuels was disrupted, and Soviet markets disappeared. The sector has not recovered appreciably from that reduction; if gold production is not counted, in 2005 industry contributed only 14 percent of the gross domestic product (GDP). Investment and restructuring have remained at low levels, and the electricity industry (traditionally an important part of industry’s contribution to GDP) has stagnated in recent years. Government support is moving away from the machine industries, which were a major contributor to the Soviet economy, toward clothing and textiles. Food processing accounted for 10 to 15 percent of industrial production until encountering a slump in 2004. In recent years, the glass industry has surpassed clothing and textiles in investment received and as a contributor to GDP. In the early 2000s, the construction industry has grown steadily because of large infrastructure projects such as highways and new gold mines. Housing construction, however, has lagged because of low investment.

Energy

Because it has limited deposits of fossil fuels and low investment in extraction industries, Kyrgyzstan is very dependent on foreign sources of energy. Most natural gas imports come from Uzbekistan, with which Kyrgyzstan has had a series of imperfect barter agreements. Per capita energy consumption is high considering average income, and the government has no comprehensive plan to reduce demand. An estimated 45 percent of electricity generated is diverted illegally or leaks from the transmission system. Hydroelectric plants generate some 92.5 percent of domestically consumed electricity, and only three commercial thermoelectric plants are in operation. Because of its rich supply of hydroelectric power, Kyrgyzstan sends electricity to Kazakhstan and Uzbekistan in return for fossil fuels. A new hydroelectric plant on the Naryn River at Kambar–Ata would supply power to parts of China and Russia, improving Kyrgyzstan’s export situation and domestic energy supply. However, in 2006 that project, which would include one of the largest hydroelectric dams in the world, remained incomplete because of lack of investment. An antiquated infrastructure and poor management make Kyrgyzstan more dependent on foreign energy when water levels are low. In the early 2000s, Kyrgyzstan was exploiting only an estimated 10 percent of its hydroelectric power potential. In 2001 Kyrgyzstan had about 70,000 kilometers of power transmission lines served by about 500 substations. Kyrgyzstan would be a member of the Shanghai Cooperation Organization’s Asian Energy Club, which Russia proposed in 2006 to unify oil, gas, and electricity producers, consumers, and transit countries in the Central Asian region in a bloc that is self-sufficient in energy. Other members would be China, Kazakhstan, Tajikistan, and Uzbekistan.

ervices

Substantial post-Soviet growth in the services sector is mainly attributable to the appearance of small private enterprises. The central bank is the National Bank of the Kyrgyz Republic, which nominally is independent but follows government policy. Although the banking system has been reformed several times since 1991, it does not play a significant role in investment. High interest rates have discouraged borrowing. A stock market opened in 1995, but its main function is trading in government securities. Because of the Akayev regime’s economic reforms, many small trade and catering enterprises have opened in the post-Soviet era. Although Kyrgyzstan’s mountains and lakes are an attractive tourist destination, the tourism industry has grown very slowly because it has received little investment. In the early 2000s, an average of about 450,000 tourists visited annually, mainly from countries of the former Soviet Union.

External trade

Kyrgyzstan's principal exports, which go overwhelmingly to other CIS countries, are nonferrous metals and minerals, woolen goods and other agricultural products, electric energy, and certain engineering goods. In turn, the Republic relies on other former Soviet states for petroleum and natural gas, ferrous metals, chemicals, most machinery, wood and paper products, some foods, and most construction materials. In 1999, Kyrgyz exports to the U.S. totaled $11.2 million, and imports from the U.S. totaled $54.2 million. Kyrgyzstan exports antimony, mercury, rare-earth metals, and other chemical products to the U.S., and it imports grain, medicine and medical equipment, vegetable oil, paper products, rice, machinery, agricultural equipment, and meat from the U.S.

Reexport of China-made consumer goods to Kazakhstan and Russia, centered on Dordoy Bazaar in Bishkek, and to Uzbekistan, centered on Karasuu Bazar in Osh Province, is particularly important; it is thought by some economists to be one the country's two largest economic activities. [Sebastien Peyrouse, [http://www.silkroadstudies.org/new/docs/Silkroadpapers/2007/0709China-Central_Asia.pdf Economic Aspects of China-Central Asia Rapprochment] . Central Asia - Caucasus Institute, Silk Road Studies Program. 2007. p.18.]

The Kyrgyzstan Government has reduced expenditures, ended most price subsidies, and introduced a value added tax. Overall, the government appears committed to transferring to a free market economic system by stabilizing the economy and implementing reforms, which will encourage long-term growth. These reforms led to Kyrgyzstan's accession to the WTO on December 20, 1998.

Investment

The stock market capitalisation of listed companies in Kyrgyzstan was valued at $42 million in 2005 by the World Bank. [ [http://web.worldbank.org/WBSITE/EXTERNAL/DATASTATISTICS/0,,contentMDK:20394793~menuPK:1192714~pagePK:64133150~piPK:64133175~theSitePK:239419,00.html Data - Finance ] ]

Other statistics

Investment (gross fixed):17% of GDP (2004 est.)

Household income or consumption by percentage share:
* "lowest 10%:" 3.9%
* "highest 10%:" 23.3% (2001)

Distribution of family income - Gini index:29 (2001)

Agriculture - products:tobacco, cotton, potatoes, vegetables, grapes, fruits and berries; sheep, goats, cattle, wool

Industrial production growth rate:6% (2000 est.)

Electricity
* "production:" 11,720 GWh (2002)
* "consumption:" 10,210 GWh (2002)
* "exports:" 1,062 GWh (2002)
* "imports:" 375 GWh (2002)

Electricity - production by source:
* "fossil fuel:" 7.6%
* "hydro:" 92.4%
* "other:" 0% (2001)
* "nuclear:" 0%

Oil:
* "production:" 2,000 barrel/day (2001 est.)
* "consumption:" 20,000 barrel/day (2001 est.)
* "exports:" NA
* "imports:" NA

Natural gas:
* "production:" 16 million m³ (2001 est.)
* "consumption:" 2.016 billion m³ (2001 est.)
* "exports:" 0 m³ (2001 est.)
* "imports:" 2 billion m³ (2001 est.)

Current account balance:$-87.92 million (2004 est.)

Exports - commodities:cotton, wool, meat, tobacco; gold, mercury, uranium, natural gas, hydropower; machinery; shoes

Imports - commodities:oil and gas, machinery and equipment, chemicals, foodstuffs

Reserves of foreign exchange & gold:$498.7 million (2004 est.)

Exchange rates:soms per US dollar - 41.731 (2004), 43.6484 (2003), 46.9371 (2002), 48.378 (2001), 47.7038 (2000)

ee also

*Kyrgyzstan
*Economy of Asia

References

External links

* [http://www.iwpr.net/?p=bkg&s=b&o=325594&apc_state=henh Minister wants bigger role for local mining firms]