Central Asian Nations See Strong Economic Progress, Expanding Trade Potential

Photo: gov.kz

The Astana Times has published an article entitled “Central Asian Nations See Strong Economic Progress, Expanding Trade Potential.” The Caspian Post reprints the article.

Diverse economies, common potential

Central Asia’s combined GDP stands at $347 billion, quadrupling over the last 20 years, with a population of 77 million that has grown 1.4 times since 2000. The United Nations data projects annual population growth of 1.1% through 2040, suggesting further economic expansion as the working-age population increases.

The economies of Central Asia vary considerably. Kazakhstan’s GDP reflects upper-middle-income characteristics, with services and industry dominating, while Turkmenistan relies heavily on industry due to its mineral resources. In the Kyrgyz Republic, Tajikistan, and Uzbekistan, agriculture plays a larger role, typical of lower-middle-income economies.

Kazakhstan’s GDP rose 4% from January to September 2024, up from 3.7% earlier in the year, led by gains in agriculture, construction, transport, and communications. The construction sector benefited from starting support for housing initiatives for flood victims. The trade surplus rose to $15.4 billion, up $4 billion from last year, driven by energy and chemical exports, while imports fell by 5.6%.

The country’s foreign trade turnover from January to August was $91.7 billion, down 0.6% from 2023. Exports rose 3.3% to $53.5 billion, while imports decreased by 5.6% to $38.1 billion. Trade with Eurasian Economic Union (EAEU) countries totaled $18.9 billion, a 3.3% decrease, with a 9.8% drop in exports and a 0.9% increase in imports.

Uzbekistan’s GDP rose by 6.4% in the first half of 2024, up from 5.6% a year earlier. Budget revenues increased by 14% to 113 trillion soums (US$8.8 billion), while expenditures reached 149.8 trillion soums (US$11.6 billion), resulting in a budget deficit. Uzbekistan’s foreign trade turnover grew 8.5% to $31.8 billion, with exports up 5.5% and imports rising 10.6%.

In the Kyrgyz Republic, investments surged 59.3% from January to August, focusing on mining, transportation, and energy. GDP growth rose to 8.4% from January to September, driven by strong consumer activity and investment. Trade turnover increased 4.7% from January to July, as imports from China climbed by 32.7%, while exports declined due to reduced shipments to Russia and Kazakhstan. Trade with EAEU countries accounted for 30.6% of total turnover, while trade with non-EAEU countries made up 69.4%.

Tajikistan’s economy continues to grow, supported by consumption and exports. Inflation remains below the National Bank’s target, with consumer prices rising only 3.6% in August. 

From January to August, retail sales rose by 12.3%, while paid services increased by 12.7%, following growth rates of 14.3% and 11.2%, respectively, in the first half of the year. Wage growth, including public sector increases beginning July 1, and continued remittance inflows bolstered trade and services. Exports, primarily of metals and textiles, rose by 45.5%, contributing significantly to GDP growth.

The trade deficit grew to $3.2 billion over the first eight months of the year, up from $2.8 billion during the same period in 2023. Imports increased by 21.5% to $4.5 billion amid rising domestic demand, while exports surged by 45.5% to $1.3 billion, led by precious and base metals and textiles.

Cross-border flow of goods 

Mutual trade among Central Asian nations is growing. Over the first eight months, Kazakhstan’s exports to the Kyrgyz Republic included fuel, oil, and derivatives (US$141.7 million), petroleum products (US$74.1 million), alcoholic and non-alcoholic beverages (US$47 million), sweetened drinks (US$42.8 million), tobacco (US$36.8 million), cigars (US$36.8 million), ferrous metals (US$31.5 million), salt and construction materials (US$26.2 million), coke and bitumen (US$25 million), nuclear reactors and boilers (US$23.4 million), plastics (US$22.9 million), ground transportation equipment excluding rail (US$20.9 million), milling products (US$19 million), wheat flour (US$18.4 million), and coal (US$12.9 million).

The Kyrgyz Republic’s main exports to Kazakhstan primarily included ores, slag, and ash; precious metal ores and concentrates; plastics and plastic packaging; and ferrous metals valued at $31.5 million. Iron and non-alloy steel rods also totaled $31.4 million, while clothing and accessories contributed $11.7 million. Exports of dairy products, eggs, and honey amounted to $22.7 million, with cereal products reaching $16 million, and bread and pastries adding another US$14 million.

The two countries aim to reach $2 billion in mutual trade soon.

Kazakhstan-Uzbekistan trade from January to August 2024 reached $2.5 billion, down nearly 15% from last year. Uzbekistan’s share of Kazakhstan’s total trade fell from 3.2% to 2.7%. Uzbek auto industry products, including vehicles and parts, accounted for the largest share (28.4%) of imports, totaling $215.9 million. Fruits and vegetables ranked second at $132.2 million, with other items including metallurgical products, light industry goods, household appliances, and tobacco.

During this period, Kazakhstan exported over 1.9 million tons of wheat and grains to Uzbekistan, totaling $370 million. Metallurgical products comprised a significant portion of exports, with ferrous metals valued at $319.9 million and non-ferrous ores and concentrates at $66.3 million. Kazakhstan also supplied oil and petroleum products (US$65.1 million) and various food items, such as meat (US$70.2 million), vegetable oils (US$102.6 million), and sugar (US$30 million). The two countries are working to expand trade volume to $10 billion.

Kazakhstan-Tajikistan trade reached $780.7 million over eight months, with exports at $613.2 million and imports at $167.5 million. Major exports from Kazakhstan included wheat, natural gas, aluminum oxides and hydroxides, wheat flour, barley, pasta, and cyanides. Imports from Tajikistan featured copper, zinc, and lead ores, dried fruits, various nuts, grapes, onions, garlic, apricots, cherries, peaches, plums, and mineral water.

Kazakhstan and Tajikistan have set a goal to increase trade volume to $2 billion.

Trade between Kazakhstan and Turkmenistan has quadrupled over the past five years, reaching $318.3 million from January to August this year, with exports at $186.4 million and imports at $131.9 million. Kazakhstan’s main exports to Turkmenistan include grains, flour, ferrous metals, non-metallic ores, and petroleum products. Imports from Turkmenistan feature natural gas, citrus fruits, tomatoes, and mineral, chemical, and textile products.

Experts on the region’s outlook

Yevgeniy Vinokurov, an expert at the Eurasian Development Bank, says Central Asia has evolved over the past two decades into a significant economic region with growing political influence.

“The quality of economic policy is improving, and there are promising opportunities in trade, investment, transport, retail, real estate, and green energy. The region’s integration into the global economy is accelerating, with foreign trade turnover increasing more than eightfold,” said Vinokurov.

He stressed the need for a fresh perspective on Central Asia, free from outdated stereotypes, to fully harness its potential. Despite the region’s progress, it remains vulnerable to structural challenges, including its lack of sea access.

“This is a geoeconomic challenge, forcing countries to shoulder high transport and logistics costs. The lack of sea access constraints growth and trade,” he said.

Vinokurov also noted the region’s reliance on resources and limited financial development, which contribute to GDP volatility and restrict income growth.

“Climate change and environmental degradation are pressing issues for Central Asia, with serious risks tied to soil degradation, irrigation, water flow, and melting glaciers. This leads to rising temperatures and environmental pollution,” added Vinokurov.

Sherzod Faiziyev, the deputy director of Uzbekistan’s International Institute of Central Asia, believes deeper cooperation will require greater effort and compromise among Central Asian nations to advance regional initiatives.

“A fully operational free trade zone without exceptions or restrictions is essential, alongside steps to harmonize legislation, reduce barriers, and develop regional trade and logistics chains,” said Faiziyev. 

He emphasized that encouraging investment, improving transport corridors, and creating an integrated economic space will be key to sustainable growth.

Faiziyev added that these joint efforts could enhance transportation infrastructure, boost trade, drive economic development, create jobs, and improve living standards across the region.