The preservation of the payment balance is possible due to remittances and a significant increase in gold and foreign exchange reserves.
According to the results of last year, the economy of Kyrgyzstan grew by 11.1% in real terms. Despite a trade deficit of $10.1 billion, the payment position remains balanced thanks to remittances and a sharp increase in gold and foreign exchange reserves, as noted by Alisher Karimov, a leading analyst at Kursiv Research.
Macroeconomic Indicators
The economy of the Kyrgyz Republic (KR) demonstrates steady growth, with an expected average growth rate of 9.2% per year from 2021 to 2025. According to preliminary data from the National Statistical Committee, by 2025, GDP will reach nearly 2 trillion soms ($22.6 billion), which is 13 times less than the corresponding figure for Kazakhstan. The high growth rates of KR in recent years are associated with the low base effect.
Kyrgyzstan has benefited from the situation in the region, as the number of relocants has increased in recent years (up to 340,000 in 2022-2023), and demand for labor migrants has risen in Russia. According to World Bank data, from 2010 to 2024, the volume of remittances to Kyrgyzstan will account for 28.1% of GDP.
In the first quarter of 2025, the number of registered migrants from Kyrgyzstan in Russia increased by 6.6%, rising from 352,000 in January to 377,000 by the end of March (according to estimates from the International Organization for Migration). This means that every eighth working-age citizen of the country worked in Russia.
As a result, the volume of remittances to Kyrgyzstan in the first nine months of 2025 increased by almost 25% compared to the same period last year. These funds, along with income from gray re-exports, helped balance the payment balance. At the same time, favorable conditions in the gold market contributed to an increase in the international reserves of the National Bank.
Key Sectors of the Economy
The service sector accounts for about half of Kyrgyzstan's economy (51.2% of GDP in 2025), and last year this sector showed strong growth: value added increased by 10.9%, and the volume of market services reached 2.9 trillion soms (+14.8%).
Trade remains a key driver in this sector, accounting for 76.3% of all services. Trade turnover grew by 17.8%, amounting to 2.2 trillion soms. The financial and insurance sector also showed moderate growth (0.8%) with a volume of 290.7 billion soms (9.9% of all services). Logistics (+6.5%, to 105.3 billion soms) and HoReCa (+14.3%, to 73.3 billion soms) also noted positive dynamics.
The growth dynamics of the service sector are largely due to an increase in household incomes, which rose by an average of 18.9%, while inflation at the end of the year was 9.4%. Consumer activity is supported by a stable inflow of remittances and active consumer lending.
The manufacturing industry ranks second in the economy (13.7% of GDP) with a growth rate of 9.8%. Key sectors such as metallurgy, food industry (including beverages and tobacco), and the production of rubber and plastic products account for 90% of processing. In metallurgy, which occupies 62.2% of processing, a slight growth was recorded (+0.2%). Although statistics do not provide detailed data on the shares of specific metals, it can be assumed that a significant portion of production includes gold.
In the food industry, growth was 30.1%, mainly due to an increase in the production of non-alcoholic beverages (1.6 times), pasta (+41.8%), and distilled alcoholic beverages (+11.4%). The production of rubber and plastic products increased by 35.7%, which, according to estimates from the National Statistical Committee, was mainly ensured by construction materials (+36.6%). Significant growth in this area supports import substitution, especially relevant against the backdrop of a construction boom in the country.
The construction sector, which accounts for 8.7% of GDP, continues to demonstrate growth rates exceeding 20% for the second consecutive year thanks to large state projects in transport infrastructure, energy, and housing construction.
The Kambarata HPP-1, which will become one of the largest hydropower plants in Central Asia, is at the center of these efforts. Transport projects are also actively developing, including new roads and several interchanges, overpasses, and tunnels through mountain passes. In December 2025, the construction of the China-Kyrgyzstan-Uzbekistan railway began. In the housing sector, by the end of 2025, 15,100 housing units were commissioned, with a total area of 1.8 million square meters (+15.7%).
The mining sector accounts for only 2.1% of GDP, but it has seen significant growth (+14.2%) due to increased production of metallic ores (+21.6%), coal (+10.3%), and other minerals (+40.2%).
Investments in Fixed Capital
The volume of investments in fixed capital continues to grow, reaching 374.6 billion soms (19.0% of GDP) in 2025, which is 18.4% more in real terms compared to the previous year.
The structure of investments in fixed capital has changed slightly. In 2020-2024, the share of the mining industry accounted for 18-22% of total investments, while in 2025 this figure decreased to 7.8%. At the same time, the share of transport and logistics has significantly increased from 8-12% to 17.5%. This may be related to the completion of the investment cycle in gold mining. At Kumtor, the largest gold ore deposit in Kyrgyzstan, underground mining and processing of enrichment waste have been launched.
A change in the structure of financing is also observed — the share of internal sources decreased from 86% in 2024 to 78.9% in 2025, which is associated with a decline in investment activity from businesses. At the same time, investments from the republican budget increased (by 1.4 times) and funds from the population (+3.8%). The share of investments from external sources increased to 21.1% (14% in 2024). In this category, there has been growth in foreign loans (by 2.3 times) and foreign direct investments (by 1.7 times).
Inflation and Monetary Policy
In 2025, the monetary policy of the National Bank of the Kyrgyz Republic was aimed at maintaining price stability, considering increased domestic demand and fluctuations in global markets. The medium-term inflation target level is set at 5–7%.
Throughout the first half of 2025, the regulator maintained the rate at 9%, even though inflation exceeded the upper limit by 0.1 percentage points in April. The main factors driving price increases were rising household incomes and an influx of remittances from abroad. The situation worsened after tariff increases in May. In July, the National Bank raised the rate by 0.25 percentage points, leading to a negative real rate (-0.25% in August). Subsequent rate increases to 10% in October and 11% in November helped to slightly tighten monetary conditions, however, inflation remained at an elevated level.
The impact of external factors on the economy of Kyrgyzstan remains insignificant: the exchange rate of the som to the dollar has hardly changed in 2025. Since the introduction of the som into circulation in 1993, the NB KR has applied a floating exchange rate regime, conducting currency interventions to prevent sharp fluctuations. In 2025, the National Bank intervened in currency trading eight times, conducting interventions totaling $853 million (9.9% of gold and foreign exchange reserves). The last operation consisted of a net sale of currency amounting to $179.5 million.
The trade balance continues to be in deficit: in 2025, imports amounted to $13.0 billion, significantly exceeding exports of $2.9 billion. At the same time, exports decreased by 44.5%, while imports increased by 3.9%.
The decline in gold exports by 72.8% to $682.9 million (compared to $2.5 billion in 2024) was a key factor in the deterioration of the trade balance. Nevertheless, exports of ores and concentrates of precious metals increased by 95.5%, amounting to 413.6 million. Among the countries that account for the main export supplies, Switzerland stands out (gold worth $437.8 million), China (ores and concentrates worth $89.9 million), Russia (clothing worth $80.6 million, fruits and nuts worth $35.6 million), and Uzbekistan (ores and concentrates worth $175.1 million). Imports mainly increased due to consumer and industrial goods, with the exception of meat (-5.0%), clothing (-27.7%), chocolate (-2.1%), and sugar (-26.3%).
By the end of 2025, the trade balance deficit amounted to $10.1 billion ($7.3 billion in 2024), which corresponds to 44.3% of GDP. This deficit is partially offset by remittances from labor migrants, which increased by 23.1% to $2.5 billion in the first nine months of 2025, equivalent to 17.8% of GDP, although below the average value for 2020-2024 (25.5%).
Analysis of the payment balance shows that in the first nine months of 2025, $3.9 billion entered the country under the item related to "errors and omissions," which accounts for unrecorded capital flows and shadow exports. Often, goods from third countries are resold through Kyrgyzstan to the EAEU, leading to undervaluation or incorrect declaration to evade taxes. The share of gray exports can reach 40% of total trade turnover, which has allowed the payment balance deficit to remain at $663 million ($344.4 million for the first nine months of 2024). However, the Federal Customs Service of Russia is developing a system for confirming the expected delivery of goods (SPOT) to combat gray imports, which may limit these flows in the future. The introduction of SPOT is planned to be tested from April 2026 and fully implemented from July 2026.
Considering the significant inflow of currency in the first nine months of 2025, both official ($2.5 billion) and unrecorded ($3.9 billion), Kyrgyzstan successfully covers a large part of its trade deficit. As a result of rising gold prices, the NB KR can conduct interventions and increase reserves. According to the World Gold Council, Kyrgyzstan ranks 15th in the world in gold purchases among central banks. In 2025, gold prices significantly increased, contributing to a 69.1% growth in the country's gold and foreign exchange reserves to $8.6 billion.
Fiscal Policy and Public Debt
As of the end of 2025, the state budget was executed with a surplus of 50.2 billion soms (2.5% of GDP). Total revenues increased by 44.9% to 673.2 billion soms. The main sources of revenue were VAT (24.4%), corporate income tax (21.9%), and taxes on international trade (customs duties and excise taxes on goods produced outside the EAEU accounted for 13.0%). The volume of non-tax payments amounted to 189.5 million soms (28.1%), increasing by 86.8% compared to the previous year.
State budget expenditures increased by 45.9% to 623 billion soms, which can be divided into three main categories: social and cultural sphere (48.1% of expenditures, 212.3 billion soms), defense and security (27.1%, 119.7 billion), and state services in economic activities (24.3%, 107.2 billion).
The public debt at the end of 2025 amounted to 779.8 billion soms (approximately $8.9 billion), of which 59.9% ($5.3 billion) is accounted for by external borrowings. Almost half of the external debt consists of concessional loans from development institutions such as the World Bank, Asian Development Bank, and IMF. About one-third of the external debt is formed by bilateral concessional loans.
The fiscal position of Kyrgyzstan is strengthening due to favorable internal and external conditions, and the structure of the debt, with a high percentage of concessional loans, is quite stable in the long term.
Forecasts for 2026
The EDB forecasts that high consumer activity will support economic growth at 9.5% this year, which is slightly lower than last year's figures. Other organizations, such as the IMF and World Bank, expect growth of no more than 5.3-5.5%.
IMF analysts believe that the re-export effect to Russia may diminish in the near future, and the tightening of sanctions may reduce the volume of remittances. They also predict a possible increase in the deficit with the increase in imports of equipment for infrastructure projects. Another source of stress for the economy may be a decrease in gold prices amid rising energy prices. Over the past five years, nominal GDP per capita has doubled, reaching $2,800 by the end of 2025, while the unemployment rate has decreased from 5.3% to 3.7%. In accordance with the National Development Program until 2030, the government aims to increase GDP per capita to $4,000-4,500, and the total volume of the economy to $30 billion, which implies a one-third growth compared to the current level.
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