Kyrgyz economy shrinks 4% in Jan-May as troubles at flagship gold mine deepen

By bne IntelliNews June 13, 2016

Kyrgyzstan’s economy contracted by 4% y/y in the first five months of 2016, swinging from a growth of 6.5% y/y a year earlier, figures released by the National Statistical Committee showed on June 10.

The decline in GDP was driven by lower production at the country's flagship gold mine Kumtor. The mine is the country’s single largest contributor to GDP – it accounted for 6.8% of GDP in 2015 - and also Kyrgyzstan's largest taxpayer and employer. Excluding Kumtor’s operations, the country's GDP registered a 0.5% growth in the five-month period. An ongoing dispute between Kumtor mine’s operator and local authorities threatens further decline in production, negatively affecting the country’s economy in the next months.

Kyrgyzstan’s industrial production volumes fell by 4.7% y/y in January-May, excluding Kumtor contribution. Including the mine's operation, the country's industrial production dropped 24.3%.

Kumtor produced 86,444 ounces of gold in the first quarter of 2016, down from 170,683 ounces in the same period last year. Canada's Centerra Gold, the operator of Kumtor mine, said in May it will be forced to halt operations unless it receives environmental permits to operate beyond June.

Shutting down Kumtor between July 1 and December 31 would result in losses worth $122mn to the country’s economy, Centerra Gold’s local unit said recently. Employees of Kumtor threatened to hold mass protests in case production at the mine halts, trade unions said on June 10.  

The World Bank has recently cut its estimate for Kyrgyz economic growth for this year saying it now expects the GDP to expand by 3.4%, weaker than its previous forecast of 4.2%. 

The statistics office’s figures also showed annual consumer price inflation (CPI) in the country stood at 0.7% in the first five months of the year, versus 9% a year earlier.

The number of registered unemployed in the country stood at 58,600 at the end of May, down by 1.1% from a year earlier, the figures show.

Related Articles

Poroshenko officially nominates Smolii for post of Ukraine central bank governor

Ukrainian President Petro Poroshenko has nominated Yakiv Smolii, the acting head of National Bank of Ukraine (NBU), as a candidate for the post of governor to replace the outgoing governor ... more

Moody’s raises Mongolia’s long-term issuer and senior unsecured ratings to ‘B3’ with stable outlooks

Moody's Investors Service on January 18 raised Mongolia's long-term issuer ratings and senior unsecured ratings from Caa1 to B3 with stable outlooks. The ... more

Azerbaijan's IBA sees assets fall 29% y/y in 2017 after debt restructuring

The assets of the International Bank of Azerbaijan (IBA), the largest lender in the country, contracted by 28.9% y/y to AZN8.7bn ($5.1bn) in 2017, the state-controlled bank reported on January 10. ... ... more

Dismiss