Investment relations within Central Asia are continuing to grow stronger. By the end of the first half of 2024, intraregional accumulated investments in the region increased by 40% over a year and a half, reaching $834 million, as reported in the Eurasian Development Bank’s (EDB) Monitoring of Mutual Investments of the EDB - 2024 report.
The report provides a comprehensive analysis of the scale, dynamics, geographic distribution, and sectoral structure of mutual direct investments across the Eurasian region from 2016 to mid-2024, The Caspian Post reports citing The Astana Times.
Special attention is given to the investment flows within Central Asia, examining the roles of these countries as both capital exporters and recipients. The report also extends its geographical scope to include Mongolia.
Kazakhstan and Uzbekistan lead in mutual investments in the Eurasian Region
Kazakhstan, Uzbekistan, and Azerbaijan are the top three recipients of mutual investments in the Eurasian region, attracting $10.4 billion (22.6%), $10.2 billion (22.1%), and $5.8 billion (12.6%), respectively. As of mid-2024, these countries account for nearly 60% of the total mutual foreign direct investment (FDI) stock. Kazakhstan, in particular, saw a record 17% increase in mutual FDI inflows since 2022.
Azerbaijan leads in the ratio of exported mutual investments to GDP, rising to 6.6% by mid-2024, up from 4% in 2022.
Private companies play a dominant role in investment activities, accounting for 68% of mutual FDI stock in the Eurasian region at the end of the first half of 2024.
Key sectors driving mutual investments
The primary sectors attracting mutual investments are raw materials (35.6%), manufacturing (15.2%), and transport and logistics (11.6%), collectively representing over 60% of the total FDI volume.
The manufacturing sector has been the largest contributor to investment growth, with mutual FDI in manufacturing increasing by $1.1 billion since 2022, reaching $7 billion by mid-2024. The sector currently hosts 93 active projects, the highest number among all industries.
The agro-industrial sector has also shown consistent growth since 2016, with an average annual increase of 6.7%. Since 2022, investments in this sector have surged by 22%, reaching $2.2 billion by mid-2024.
Intraregional investments in Central Asia
The manufacturing sector experienced the highest growth, with investment volumes expanding 2.5 times.
Kazakhstan remains the region’s leading investor, accounting for 80% of total intraregional exported investments or $671 million as of mid-2024.
Uzbekistan’s role as an investor in Central Asia is expanding significantly. The country’s direct investment outflows rose from $24 million in 2022 to $164 million by mid-2024.
Medium-term trends in mutual investments
Several key trends are expected to shape mutual investments in the Eurasian region. Greenfield projects will remain the preferred form of new investments, while the manufacturing sector will continue to attract the highest volume of mutual investments. Growth in the agro-industrial sector is expected to remain strong, and Uzbekistan’s influence as both an exporter and importer of capital will expand. Additionally, Central Asia will increasingly become a focal point for mutual investment flows.
