Kyrgyzstan May Lead Eurasia’s GDP Growth in 2024

The Eurasian Development Bank (EDB) region’s GDP growth of 4.2% in 2024 will be the highest since 2012, excluding the period of recovery from the COVID-19 pandemic and EDB has raised its 2024 economic growth forecast for the region by 0.8 p.p., and it is ahead of the global rate of 3.2%.

In its “Macroeconomic Outlook 2025-2027,” EDB said that expanding domestic demand, supported by the countries’ stimulative fiscal policy, together with improving export opportunities have fuelled strong growth in the region’s economies.

Kyrgyzstan will lead the region with highest GDP growth rate of 9.4% due to investment projects and increased exports, followed by Tajikistan (8.4%0, Armenia (6%), Kazakhstan (4.5%), Belarus (4.3%), and Russia (4,1%) respectively.

In 2025, the region’s economy will grow by 2.9%. Domestic sources of growth will remain the key drivers of economic gains. Kazakhstan’s economic growth rate will steadily increase to 5.5% due to the launch of a new investment cycle.

Budget stimulus will support domestic demand growth in Russia, where the economy will expand by 2.4% y-o-y. Growing demand from Russia and strong consumer activity will create conditions for Belarus’ economy to expand by 2.6%.

Some of the positive factors that are expected to ensure high growth rates throughout the forecast period include expansionary fiscal policies, lower interest rates, increased oil production, and government programmes aimed at regional development and infrastructure construction.

EDB analysts forecast that the economies of Russia and Belarus will maintain high growth rates in 2025 – 2.4% and 2.6%, respectively. In Russia, economic expansion would be supported by fiscal stimulus and growth in exports to China. In Belarus, the key growth drivers would be stronger demand from Russia and high consumption.

Inflation in Eurasia                    

Inflation in the EDB region will be around 6.4% for 2025 and the picture across countries remains mixed.

in Armenia and Tajikistan, price growth has been below the target ranges, it was below target between May and October last year in the Kyrgyz Republic, while in Belarus it remained within the target corridor, and in Russia and Kazakhstan it remained above target.

“We forecast a gradual movement of inflation towards the target levels in 2025. Against the background of continuing high interest rates, inflation will start to slow down to 6.5% in Russia and 7.3% in Kazakhstan,” EDB said.

In Armenia, inflation will rise towards the boundaries of the target range at 3.1%. Price growth in Tajikistan will return to the target range and in the Kyrgyz Republic it will stabilise within its boundaries. At the end of 2025, inflation in Kyrgyzstan will reach 5%, while in Tajikistan it will reach 5.8%. Price growth in Belarus will moderately accelerate to 6.6%.

Easing inflation will create opportunities for lower interest rates in Kazakhstan and Russia and the National Bank of Kazakhstan will continue to cut the policy rate, which is likely to reach 11.25% by the end of 2025.

The Bank of Russia is unlikely to start a cycle of rate cuts until Q3 of 2025 at the earliest, and by the end of the year the rate will be around 19%, EDB said.

Global Economy

Despite the end of the period of high interest rates, structural factors will constrain economic gains resulting in the global economy entering a slowdown phase, the Eurasian Development Bank (EDB) said.

EDB also said that lower productivity growth rates, weakening foreign trade as a driver of economic growth, increasing fragmentation and unfavourable demographic trends will be the key reasons that will be slowing down global economic activity.

“We forecast the US economy to slow its growth to 1.6% in 2025, the Eurozone economy to recover to around 1.1%, and China’s economy to accelerate to 5% on the back of a stimulative fiscal policy and lower interest rates,” EDB said.

Inflation in advanced economies has slowed but price growth will remain elevated due to rising costs caused by the fragmentation of the global economy and continued pressure from a tight labour market. Leading central banks have begun a cycle of rate cuts, but risks of accelerating inflation remain high.

This will make regulators cautious about cutting rates, which will remain above the average levels of the past decade, the bank noted.