Kyrgyzstan’s economy grew by 11% last year, with the re-export of goods to Russia accounting for a significant share of the expansion amid Western sanctions, according to the Asian Development Bank (ADB).

Over the past four years, re-exports have accounted for an estimated 30-40% of Kyrgyzstan’s economic growth. Cars, electronics and machinery, including potentially dual-use equipment, were shipped to Russia through Kyrgyzstan, NYT reports.

The country’s economic expansion has also been supported by high gold prices, the growth of the financial and cryptocurrency sectors, and increased government spending on construction.

In Bishkek, the economic boom has coincided with a construction surge, with roads, airports and other infrastructure being upgraded.

“There is a feeling that the economy has grown - it is like a wave, and you want to ride it,” said entrepreneur Chingiz Alkanov, who is building a logistics hub near Bishkek.

However, the head of developer Royal Tower, Mirlan Akzhigitov, warned that the boom may not last indefinitely.

“This will not continue forever. Right now, we are like at the top of a mountain,” he said.

Kyrgyz authorities say the economic growth cannot be attributed solely to re-exports. Prime Minister Adylbek Kasymaliev said tax revenues and customs collections have increased, while government investment in fixed capital has risen 16-fold since 2021.

“Our only path now is growth. We plan to grow continuously over the next decade,” Kasymaliev said.

At the same time, Kyrgyzstan is facing increasing pressure from Western countries, which have imposed sanctions on Kyrgyz organizations linked to the supply of goods to Russia.

EU exports to Kyrgyzstan reached about $2.5 billion last year, roughly eight times the 2021 level, although below the 2023 peak of $3.1 billion.

Kasymaliev said Kyrgyz authorities monitor goods subject to sanctions imposed by the EU, US and UK. He said some suppliers had reported shipments to Kyrgyzstan only “on paper.”

“Sometimes there is a feeling that their main goal is to make a sale and then blame Kyrgyzstan,” the prime minister said.

Meanwhile, the rapid expansion has been accompanied by rising prices and concerns about an overheating economy, an issue previously highlighted by the International Monetary Fund (IMF).

Inflation in Kyrgyzstan is running at around 11%.

Economist Azamat Akenev said the benefits of the economic expansion are concentrated mainly among people working in the financial, construction and logistics sectors, as well as those with close ties to the authorities.

“New rich people have appeared in the country - those who are close to the authorities,” he said.