Photo: Florence Lo/AFP
Eurasia
30/03/2025 08:00
Central Asia’s economic growth is projected to reach 5.7 percent in 2025 before easing to 5.2 percent in 2026, according to the European Bank for Reconstruction and Development (EBRD). Despite global headwinds—including persistent inflation, weak reform momentum, and faltering external demand—the region continues to outperform many others, with its growth expected to surpass that of China in 2024, Astana Times reported.
The EBRD’s latest Regional Economic Prospects report highlights that Central Asia’s growth slowed slightly from 5.7 percent in 2023 to 5.4 percent in 2024, impacted by Kazakhstan’s stagnant mining output and severe weather in Mongolia. Nevertheless, internal drivers such as rising real wages, government spending, and remittances have fuelled growth.
In contrast, Central Europe and the Baltic states are expected to grow by 2.7 percent in 2025, while South and Eastern EU countries face slower progress at 2.1 percent due to reduced investment and fiscal stimulus.
EBRD Chief Economist Beata Javorcik identified weaker global demand and commodity reliance as ongoing risks for Central Asia. Slower Chinese growth and potential price shocks could dampen the region's outlook. However, she noted a rise in greenfield foreign direct investment (FDI) projects in Kazakhstan and Uzbekistan, driven by these countries’ multi-vector foreign policy strategies.
Kazakhstan's economy grew robustly in 2024, led by non-oil sectors, low unemployment, and strong consumer spending. The economy is projected to grow 5.2 percent in 2025 due to the Tengiz oil field expansion, but is expected to moderate to 4.5 percent in 2026. While mining remains dominant in investment, there is increasing interest in sectors like food, logistics, finance, and business support—signs of potential diversification.
Diversification remains a key challenge. Javorcik stressed that dependence on goods exports is increasingly unsustainable, especially given China's dominance in manufacturing. She highlighted IT and computer services as promising areas for Central Asia, noting Kazakhstan’s goal to increase its IT exports to 1 billion dollars by 2026. The region’s strong educational foundation provides a competitive edge, but success will depend on cost efficiency and sustainability, as global clients demand cleaner, low-carbon services.
The EBRD reaffirmed its commitment to Kazakhstan, investing over 900 million euros in 2024, and continues to support efforts to build a more competitive and diversified economy.
