AKIPRESS.COM - Kyrgyzstan's GDP grew by 7.3% in the first half of 2015, or by 4.4% excluding gold. Industry expanded by 23.6%, reflecting strong mining and goods processing, ADB's Asian Development Outlook 2015 Update finds.

Agriculture grew by 2.4%, while trade expanded by 5.8%. Growth in construction halved to 11.2% from 22.0% in 2014, reflecting more moderate expansion in capital investment—which also halved, to 6.8% from 13.5% in 2014.

The growth forecast for 2016 is similarly sustained on the assumption of some recovery in the Russian Federation and other subregional trading partners. The Kyrgyz Republic’s accession to the Eurasian Economic Union (EEU) on 8 May 2015 and the physical opening of the EEU borders effective from 12 August 2015 add uncertainty to the country’s growth prospects in the second half of 2015 and over the medium term, the report says.

The Kyrgyz som depreciated by about 5.4% in the first 6 months of 2015, and the exchange rate became highly volatile after 20 August 2015, following the sharp depreciation of the Kazakh tenge. By 26 August 2015, the som had depreciated by about 10.9%, from Som58.9 to the dollar on 1 January to Som65.3. Inflation may accelerate in the second half of the year, following the opening of the borders within the EEU. Inflation is expected to be at least as high in 2016 because of transitional price adjustments within the EEU, so the forecast for 2016 is similarly raised.

The January–June 2015 trade deficit narrowed by 23.1% from a year earlier as total trade declined. Imports fell by 16.8%, mainly as imports of vehicles, machinery and equipment, fertilizers, apparel, and accessories sagged, while exports fell by 2.6% with smaller shipments of fruits, vegetables, apparel, and accessories—and despite higher gold exports. Remittances were about 25.4% less than during the first 6 months of 2014, reflecting continued recession in the Russian Federation and ruble depreciation.