Kyrgyz economy swings to contraction in first half on troubles at flagship gold mine

By bne IntelliNews July 13, 2016

Kyrgyzstan’s economy contracted by 2.3% y/y in the first half of 2016, swinging from a growth of 6.8% y/y a year earlier, figures released by the National Statistical Committee showed on July 11.

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 six-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 4.4% y/y in January-June, excluding Kumtor contribution. Including the mine's operation, the country's industrial production dropped 19.5%.

Kumtor produced 86,444 ounces of gold in the first quarter of 2016, down from 170,683 ounces in the same period last year.

The Kyrgyz government forecasts GDP to grow by 2.7% in 2016 and by 2.9% next year.

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 0.8% in the first six months of the year, versus 8.2% a year earlier.

The number of registered unemployed in the country stood at 57,800 at the end of June, down by 1.2% from a year earlier, the figures showed.

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