Economy - overview: Kyrgyzstan is a landlocked, mountainous, lower middle income country with an economy dominated by minerals extraction, agriculture, and reliance on remittances from citizens working abroad. Cotton, wool, and meat are the main agricultural products, although only cotton is exported in any quantity. Other exports include gold, mercury, uranium, natural gas, and - in some years - electricity. The country has sought to attract foreign investment to expand its export base, including construction of hydroelectric dams, but a difficult investment climate and an ongoing legal battle with a Canadian firm over the joint ownership structure of the nation’s largest gold mine deter potential investors. Remittances from Kyrgyz migrant workers, predominantly in Russia and Kazakhstan, are equivalent to over one-quarter of Kyrgyzstan’s GDP.
Following independence, Kyrgyzstan rapidly implemented market reforms, such as improving the regulatory system and instituting land reform. In 1998, Kyrgyzstan was the first Commonwealth of Independent States (CIS) country to be accepted into the World Trade Organization. The government has privatized much of its ownership shares in public enterprises. Despite these reforms, the country suffered a severe drop in production in the early 1990s and has again faced slow growth in recent years as the global financial crisis, declining oil prices, and regional economic headwinds have damaged economies across Central Asia. The Kyrgyz government remains dependent on foreign donor support to finance its annual budget deficit of approximately 4-5% of GDP.
Kyrgyz leaders hope the country’s August 2015 accession to the Eurasian Economic Union (EAEU) will bolster trade and investment, but slowing economies in Russia and China and low commodity prices continue to hamper economic growth. While joining the EAEU has increased Kyrgyz labor mobility within member states, large scale trade and investment pledged by Kyrgyz leaders has been slow in developing since accession. Kyrgyz entrepreneurs and politicians alike often contend that non-tariff measures imposed by other EAEU member states, particularly Kazakhstan, are negatively impacting sectors of the Kyrgyz economy that enjoy a comparative advantage, such as meat and dairy production. Since acceding to the EAEU, the Kyrgyz Republic has continued harmonizing its laws and regulations to conform to Union standards, though many local entrepreneurs have criticized this process as disjointed and incomplete. The keys to future growth include progress in fighting corruption, improving administrative transparency, restructuring and diversifying domestic industries, and attracting foreign aid and investment.
Definition: This entry briefly describes the type of economy, including the degree of market orientation, the level of economic development, the most important natural resources, and the unique areas of specialization. It also characterizes major economic events and policy changes in the most recent 12 months and may include a statement about one or two key future macroeconomic trends.
Source: CIA World Factbook - This page was last updated on July 9, 2017