Economic Analysis - Improving External Outlook To Be Positive For Growth - MAY 2017


BMI View: The improving economic outlook for Russia will be positive for remittance inflows into Kyrgyzstan. In addition, the recovery in gold prices and the planned increase in output from the Kumtor mine and an accommodative monetary policy will lend further support. We have therefore upgraded our 2017 real GDP growth forecast to 1.8% (from 1.4% previously). However, the absence of a confirmed presidential candidate for the election this year has led to political uncertainty and could weigh on the business environment.

We are upgrading our 2017 real GDP forecast for Kyrgyzstan to 1.8% from 1.4% previously on the back of an improving external and domestic outlook. Russia's economic recovery appears to be gaining traction, and we expect stronger economic growth in Russia to be positive for remittance inflows into Kyrgyzstan. This will be supportive of domestic demand. The recovery in gold prices and the planned increase in production at the country's Kumtor gold mine will provide further tailwinds. Domestically, we forecast the central bank to maintain its accommodative monetary policy stance, which will enable the economy to continue recovering. However, we note that political uncertainty due to the absence of a confirmed presidential candidate for the 2017 elections could weigh on the business environment.

Rising Gold Prices Positive For Production

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