Country Economic Forecasts > Kyrgyzstan

GDP grew by a stronger than expected 6.3% in January-September 2015 (although excluding the Kumtor gold mine growth was a more modest 4.4%). But activity is being hampered by external factors, in particular the recession in Russia where GDP is forecast to fall 3.9% this year which has hit remittances (down over 28% on the year in Q1-Q3 2015) and exports. As a result, the current account deficit remains high, expected to be over 17% of GDP this year. In addition, growth may be adversely affected by accession to the EEU this year and the opening of EEU borders from August. Overall, we expect GDP growth of 5.5% in 2015. For 2016, we forecast growth will slow to 4%, with activity still dragged down by prolonged recession in Russia and weak growth in Kazakhstan, another key trading partner. The positive impact from gold production will be much less marked.Inflation is forecast at 6.4% this year, driven up by KGS depreciation (following the sharp falls in the Russian ruble and Kazakhstan tenge). We expect inflation to rise to 9% in 2016 on the back of further regional currency depreciations, less favourable food price effects and transitional price adjustments within the EEU.