March 2021. Kyrgyz Republic: Social and economic development in 2020 and medium-term prospective

The reduction in foreign trade operations, the weakening of the Kyrgyz som, together with the difficulties encountered with the movement of goods during the state of emergency and the increase in socio-political tensions at the end of the year affected a sharp decline in economic activity and an increase in inflation. Under the negative impact of the COVID-19 pandemic, GDP fell by 8.6% in 2020, and inflation accelerated to 9.7% by the end of the year from 3.1% a year earlier. Against the background of a strong reduction in the volume of imports of goods, and the growth of gold prices, the current account balance formed with a surplus. Significant amounts of donor assistance have helped to increase the level of international reserves, and have helped to finance public spending on the fight against the pandemic against the background of declining state budget revenues. The efforts of the National Bank of the Kyrgyz Republic were aimed at maintaining a liquidity support, which allowed to maintain the stability of the banking system and double-digit lending growth rates. In accordance with the basic macroeconomic forecast, economic recovery is expected in 2021-2022 against the background of the resumption of global economic growth. In 2021, the main support for the recovery process of consumer activity will be provided by the growth of government spending amid continuation of the implementation of anti-crisis measures. In the medium term, GDP growth will return to its potential pace on the back of an increase in the contribution from private sector investment and external demand for exported goods and services.

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