Economic Growth Too Good to be True
Economic Growth Too Good to be True
Official statistics indicate that Kyrgyzstan’s economy grew rapidly in the first half of this year, but NBCentralAsia experts say that the figures have been inflated and the country’s economy is only just starting to crawl back after a two-year dip.
According to the National Statistics Committee, gross domestic product grew by 9.2 per cent in real terms in the first half of this year compared with January-June 2006, while year-on-year inflation was just 4.6 per cent.
Russia’s Vedomosti newspaper hailed the headline figures as evidence of a “Kyrgyz miracle”, and attributed the growth to investment from the oil-rich economy in neighbouring Kazakstan.
Kazakstan is certainly the largest investor - and businesses there put around 28 million US dollars into the Kyrgyz economy last year, and the figure is expected to grow significantly after both sides agreed to establish a 120 million dollar joint investment fund at the beginning of July.
Nasirdin Shamshiyev, head of macroeconomics and analysis at the Kyrgyz economics ministry, says the high figure for GDP growth was driven principally by nine per cent growth in the electricity sector over half-year, and increased activity in the industrial, agriculture and construction sectors.
But the boom figures do not translate into higher budget revenues or a better standards of living. This, Shamshiev said, was because the grey economy is still so substantial.
According to various estimates, the shadow economy accounts for between 40 to 60 per cent of the entire Kyrgyz economy.
NBCentralAsia economic observers have questioned the official statistics, saying there is no real growth as industrial production is stagnant. They say the GDP growth figure has been exaggerated by investment in the financial sector as well as some underreported inflation.
Sapar Orozbakov, director of the Bishkek Centre for Economic Analysis, argues that the only real area of growth is the electricity industry, and the overall GDP figure is inflated.
“I totally disagree with these figures,” he said. “Above all, that’s because the Kyrgyz economy has seen a two year lull and is only now seeing a recovery.”
The chairman of parliament’s taxation committee, Avazbek Momunkulov, says any growth in GDP is due to an expansion in retail trade rather than a rise in industrial production or processing.
“Investment is not going into production, but is instead circulating in the country’s financial sector. If there was GDP growth, people would sense it,” said Momunkulov.
The director of the government’s financial-sector regulatory body, Yuruslan Toychubekov, agrees that the economy is only just starting to stabilise after the political crisis of March 2005 when the then president Askar Akaev was ousted by a popular revolt.
“Prior to March 2005, Kyrgyzstan’s economy hit rock bottom – things couldn’t have got any worse - so any subsequent small amount of growth in any part of the economy is going to be reflected as very high percentages,” he said.
(News Briefing Central Asia draws comment and analysis from a broad range of political observers across the region.)
According to the National Statistics Committee, gross domestic product grew by 9.2 per cent in real terms in the first half of this year compared with January-June 2006, while year-on-year inflation was just 4.6 per cent.
Russia’s Vedomosti newspaper hailed the headline figures as evidence of a “Kyrgyz miracle”, and attributed the growth to investment from the oil-rich economy in neighbouring Kazakstan.
Kazakstan is certainly the largest investor - and businesses there put around 28 million US dollars into the Kyrgyz economy last year, and the figure is expected to grow significantly after both sides agreed to establish a 120 million dollar joint investment fund at the beginning of July.
Nasirdin Shamshiyev, head of macroeconomics and analysis at the Kyrgyz economics ministry, says the high figure for GDP growth was driven principally by nine per cent growth in the electricity sector over half-year, and increased activity in the industrial, agriculture and construction sectors.
But the boom figures do not translate into higher budget revenues or a better standards of living. This, Shamshiev said, was because the grey economy is still so substantial.
According to various estimates, the shadow economy accounts for between 40 to 60 per cent of the entire Kyrgyz economy.
NBCentralAsia economic observers have questioned the official statistics, saying there is no real growth as industrial production is stagnant. They say the GDP growth figure has been exaggerated by investment in the financial sector as well as some underreported inflation.
Sapar Orozbakov, director of the Bishkek Centre for Economic Analysis, argues that the only real area of growth is the electricity industry, and the overall GDP figure is inflated.
“I totally disagree with these figures,” he said. “Above all, that’s because the Kyrgyz economy has seen a two year lull and is only now seeing a recovery.”
The chairman of parliament’s taxation committee, Avazbek Momunkulov, says any growth in GDP is due to an expansion in retail trade rather than a rise in industrial production or processing.
“Investment is not going into production, but is instead circulating in the country’s financial sector. If there was GDP growth, people would sense it,” said Momunkulov.
The director of the government’s financial-sector regulatory body, Yuruslan Toychubekov, agrees that the economy is only just starting to stabilise after the political crisis of March 2005 when the then president Askar Akaev was ousted by a popular revolt.
“Prior to March 2005, Kyrgyzstan’s economy hit rock bottom – things couldn’t have got any worse - so any subsequent small amount of growth in any part of the economy is going to be reflected as very high percentages,” he said.
(News Briefing Central Asia draws comment and analysis from a broad range of political observers across the region.)
