The Asian Development Bank’s (ADB’s) Asian Development Outlook anticipates a general slowdown across the Central Asian region, with the exceptions of Uzbekistan, where the development bank expects growth to rise, and Turkmenistan, where it forecasts the same level of growth as last year.

The region was hit by an economic crisis in 2016 stemming from a combination of low oil prices and the Russian economic slowdown. Growth has recovered along with moderate stabilisation in Russia and better world hydrocarbon prices - for upcoming years, however, many observers including the ADB expect the benefits of the recovery to wane.

Kazakhstan
“Kazakhstan’s recovery remains fragile. Growth is forecast to slow to 3.2% in 2018 [down from 4% growth in 2017] as expansion in industry moderates and then improves to 3.5% in 2019 with slightly faster growth in capital formation and construction,” the report said.  

On the supply side, the bank projects 5.0% growth in 2018 and 4.5% in 2019, supported by oil production and mining. The report also notes that the government’s industrialisation and diversification measures will provide “some support” as well.

The country expects inflation to slow to 6.8% in 2018 and 6.2% in 2019, which contrasts with the Kazakh central bank’s targeted range of 4-6% inflation for 2019.

Kyrgyzstan
“Growth is projected to slow to 3.5% in 2018, reflecting an expected decline in output from Kumtor, the main mine in the important gold-mining industry,” the report notes. “Recovery to 4.0% is expected in 2019 with some improvement in the domestic economy and continued growth in the region.”

The ADB believes inflation will accelerate to 4.0% in 2018 and 4.5% in 2019 due to continued growth and higher tariffs required by EEU membership.

Tajikistan
“Growth is forecast to moderate to 6.0% in 2018, despite further improvements in the external environment, as fiscal tightening to address the high ratio of public debt to GDP constrains public investment and a weak banking sector limits credit growth, curbing private investment,” the report said. Tajikistan’s growth was officially reported at 7.1% in 2017, though the figures reported by state agencies are likely unreliable given Tajikistan’s reliance on remittances from Russia.  

Inflation is expect to accelerate to 7.5% in 2018 due to liquidity spurred by “further sizable bank recapitalisation, public salary and electricity tariff hikes, and modest somoni depreciation”.

Uzbekistan
The ADB forecasts Uzbekistan’s growth to accelerate to 5.5% in 2018 and 5.6% in 2019, up from the 5.3% growth recorded in 2017, with further improvement in the external environment helping to boost export demand and foreign investment mostly from Russia.

Inflation is projected to accelerate to 16% in 2018, up from 14.4% in 2017, and slow down to 14% in 2019. “Inflationary pressures will persist following the 2017 devaluation and come as well from higher government spending on promised annual increases in wages and pensions,” the report noted.

Turkmenistan
“Growth is forecast to remain at 6.5% in 2018 and accelerate slightly to 6.7% in 2019, with an improved outlook for energy prices and an expected rise in hydrocarbon output and exports,” according to the ADB. However, the growth figures likely do not reflect the real state of Turkmenistan’s economy which has seen state budget woes lead to shortages of food items in stores including flour, and an overall economic crisis, which the authorities have likely largely been attempting to cover up.