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Central Asia, high growth but still progress to be made

The Eurasian Development Bank's latest report describes a dynamic region, but yet to reveal its full potential

Luxembourg - December 12th, 2022

Central Asia, high growth but still progress to be made
The Eurasian Development Bank’s latest report describes a dynamic region, but yet to reveal its full potential
Central Asia is one of the regions in the world that, though often far from the international spotlight, has experienced the most significant development and economic growth in recent decades. Officially certifying the extraordinary performance of the region’s republics is now a report by the Eurasian Development Bank (EDB): “The Economy of Central Asia: A Fresh Perspective”.

Source: The Economy of Central Asia: A Fresh Perspective – Eurasian Development Bank

Source: The Economy of Central Asia: A Fresh Perspective – Eurasian Development Bank
The report provides a series of very significant figures, which highlight the great economic dynamism of Central Asia: as reported also by ASIA-Plus, the region’s population, although still small compared to the large Central Asian geographical area, has grown at a high rate, reaching a current level of 77 million people. Central Asian countries’ aggregate GDP has grown more than sevenfold over the past twenty years, reaching US$347 billion. Furthermore, since 2000, the region’s share of global GDP at purchasing power parity has reportedly grown 1.8 times. The EDB also points out that a significant inflow of foreign direct investment has also made possible an average growth of 6.2% for the countries in the region over the past two decades (against an average growth of 5.3% for emerging countries): EDB analysts estimate that inward FDI stock in Central Asia totals US $211 billion and, over the past 20 years, this figure has reportedly increased more than seventeen-fold.

Regarding potential areas for improvement, the report shows that the lack of openness of some of the countries, their remoteness from major economic centers and the fact that countries have no access to the world ocean continue to affect international investors’ perception of the region. On a sectoral level, it can be seen that only a few economic sectors attract the bulk of foreign direct investment. This is the case in the energy sector: for example, about 70% of FDI stock in Kazakhstan, the region’s main recipient of foreign investment, is in the oil and gas sector. The imbalance is also evident when looking at the share of each country in the total foreign trade of the five Central Asian republics. While Kazakhstan and Uzbekistan lead the way, accounting for 52.8% and 31.2% of the total respectively, Turkmenistan, Tajikistan and Kyrgyzstan still have a lot of ground to make up, standing at 10.4%, 5.6% and 5.6% respectively.

In brief, the EDB describes a region, Central Asia, that has made important achievements in recent decades but has yet to fully exploit its great potential. This requires both the support of international investors and greater openness and transparency in the regional economies in order to fully unlock the area’s considerable human capital and entrepreneurial mindset.

Source: The Economy of Central Asia: A Fresh Perspective – Eurasian Development Bankhttps://eabr.org/en/analytics/all-publications/the-economy-of-central-asia-a-fresh-perspective/