Central Asia’s economic outlook strengthens: ADB projects 5.2% growth in 2025, led by Uzbekistan and Kazakhstan

Central Asia is emerging as a resilient economic bloc in 2024, demonstrating steady growth despite global uncertainties. According to the Asian Development Outlook (ADO) December 2024, “The growth projection for the Caucasus and Central Asia is revised upward to 4.9% from 4.7% for 2024 and to 5.3% from 5.2% for 2025.” Key factors such as strong remittance inflows, public investment, and diversification efforts underpin this momentum. However, inflationary pressures and geopolitical risks remain challenges for the region’s economies.

Uzbekistan: Driving Growth Through Investment

Uzbekistan leads the region with a robust growth rate of 6.6% for the first nine months of 2024, driven by fixed investments and infrastructure development.

• Inflation and Projections: Inflation fell to 9.5% in 2024, reflecting tighter monetary policies and global price stabilization, with further moderation expected in 2025.
• Key Drivers: Major projects in transport, energy, and urban development contributed significantly to GDP growth, alongside rising non-hydrocarbon exports.
• Future Outlook: GDP growth is projected to remain strong, with Uzbekistan focusing on digital transformation and renewable energy as part of its 2030 development strategy.

Kazakhstan: Stability Amid Diversification Efforts

Kazakhstan posted GDP growth of 4% for the first three quarters of 2024, supported by strong performances in agriculture and non-oil sectors.

• Inflation Trends: Inflation in Kazakhstan slowed to 11.3% in 2024 and is projected to decrease to 9.8% in 2025, driven by lower food and energy prices.
• Sectoral Growth: Agriculture expanded by 11.4% due to favorable weather, while manufacturing, construction, and trade grew by 4.4%, 11.3%, and 12.4%, respectively.
• Challenges and Opportunities: Despite a slowdown in oil production, diversification efforts, including investments in green energy and infrastructure, are expected to sustain growth.

Tajikistan: Record-High Growth Backed by Remittances

Tajikistan saw one of the region’s fastest growth rates at 8.4%, fueled by remittance inflows and gold exports.

• Inflation Control: Inflation was at a low 3.5% in 2024 and is expected to remain stable in 2025 due to prudent fiscal management.
• Key Contributors: Labor remittances from Russia, accounting for a significant share of household income, and strong gold exports bolstered economic stability.
• Future Growth: Tajikistan aims to reduce dependency on remittances by investing in energy and mining sectors, with growth projected at 8.1% in 2025.

Kyrgyz Republic: Balanced Growth Through Trade and Agriculture

The Kyrgyz Republic recorded GDP growth of 5.7% in 2024, supported by a rebound in agriculture and expanded trade with China and neighboring countries.

• Inflation Moderation: Inflation declined to 8.3%, with further decreases expected as supply chains stabilize.
• Tourism Revival: A resurgence in tourism following the pandemic added to growth, along with improvements in the services sector.
• 2025 Outlook: Continued trade partnerships and infrastructure investment are expected to sustain GDP growth at 6% next year.

Turkmenistan: Energy-Driven Growth with Rising Risks

Turkmenistan’s hydrocarbon-dependent economy grew by 6.2%, buoyed by strong natural gas exports to China and other markets.

• Inflation Trends: Inflation stood at 8.9%, reflecting domestic currency fluctuations and energy price volatility.
• Diversification Push: Efforts to expand non-energy sectors, including agriculture and textiles, remain in early stages but show promise.
• Challenges: The country’s reliance on global energy markets poses risks amid fluctuating demand and prices.

Afghanistan: Modest Gains Amid Humanitarian Dependence

Afghanistan’s economy grew by 2.7% in FY2024, primarily supported by international aid and modest agricultural growth.

• Inflation and Constraints: Inflation slowed to 6.1%, but domestic economic drivers remain weak, limiting broader growth potential.
• Structural Issues: Political instability and limited trade partnerships continue to challenge sustainable economic recovery.

Regional Trends and Projections

• Inflation Moderation: Regional inflation is projected at 6.8% in 2024 and expected to decline further to 6.2% in 2025, aided by stabilizing food and fuel prices.
• Growth Acceleration: With GDP growth forecasted at 5.3% in 2025, the region is poised to become a key player in global trade and energy supply chains.
• Infrastructure and Integration: Investments in transnational projects such as the Belt and Road Initiative (BRI) are enhancing connectivity and boosting trade potential.

Conclusion

The ADB states, “Central Asia’s economic outlook remains positive, with growth driven by strategic investments, diversification, and regional cooperation. As nations like Uzbekistan and Kazakhstan lead with ambitious reforms, the region’s potential for sustainable development and global integration continues to rise.” However, the bank adds that managing inflation, addressing geopolitical risks, and ensuring inclusive growth will be critical to maintaining this momentum.