National currency: Kyrgyzstani Som, KGS
- $19.2 billion
- 6% growth
- 7% 5-year compound annual growth
- $3,361 per capita
- $210.5 million
“The Kyrgyz Republic is undergoing several major economic transitions. The government recently joined the Eurasian Economic Union (current members: Russia, Kazakhstan, Armenia, and Belarus). The accession process is altering economic conditions, both immediately and in the long-term, particularly in relation to the gray economy, shuttle trading, and currency stability. Firm reliance on Russia as a source of remittances, imports, and government financing makes the Kyrgyz economy vulnerable external shocks emanating from Moscow”. (U.S. Embassy in the Kyrgyz Republic (2016, June 14). Kyrgyzstan Country Commercial Guide).
“The investment climate in the Kyrgyz Republic is best for those who are intrepid and have a high risk tolerance. The country struggles with major commercial issues. Corruption is rampant and rule of law is weak. The judicial system lacks independence and every sector of government confronts capacity and resource shortages. For most areas of commercial interest, a legal framework technically exists, but enforcement is poor – especially with regard to intellectual property rights. Potential investors should be aware that an estimated 60% or more of the economic activity in the country occurs in the unregulated gray economy. Investors in politically sensitive sectors, such as resource extraction, spend much of their time renegotiating contracts, as evidenced by the experience of the Canadian-operated Kumtor gold mine”. (U.S. Embassy in the Kyrgyz Republic (2016, June 14). Kyrgyzstan Country Commercial Guide).
- abundant hydropower;
- significant deposits of gold and rare earth metals;
- locally exploitable coal, oil, and natural gas;
- other deposits of nepheline, mercury, bismuth, lead, and zinc
Kyrgyzstan is a mountainous country with a dominant agricultural sector. Cotton, tobacco, wool, and meat are the main agricultural products, although only tobacco and cotton are exported in any quantity. Industrial exports include gold, mercury, uranium, natural gas, and electricity. The economy depends heavily on gold exports – mainly from output at the Kumtor gold mine – and on remittances from Kyrgyzstani migrant workers primarily in Russia and Kazakhstan.
Following independence, Kyrgyzstan was progressive in carrying out market reforms, such as an improved regulatory system and land reform. Kyrgyzstan was the first Commonwealth of Independent States (CIS) country to be accepted into the World Trade Organization. The government has privatized much of its ownership shares in public enterprises. Drops in production had been severe after the breakup of the Soviet Union in December 1991, but by mid-1995, production began to recover and exports began to increase.
In the recent years, Kyrgyzstan has developed a plan for economic development in coordination with international donors, and has also joined the Customs Union and the Eurasian Economic Union of Russia, Belarus, and Kazakhstan. The keys to future growth include progress in fighting corruption, improving administrative transparency, restructuring domestic industry, and attracting foreign aid and investment.
U.S.-Kyrgyzstan Bilateral Economic Relations
Kyrgyzstan exports apparel, textiles, and pharmaceutical products to the United States. It imports merchandise, machinery, electronics, and food products from the United States. Kyrgyzstan has signed a bilateral investment treaty with the United States. The treaty on double taxation that was signed by the United States and the Soviet Union remains in effect between the United States and Kyrgyzstan. Kyrgyzstan also signed a trade and investment framework agreement with the United States and other Central Asian countries establishing a regional forum to discuss ways to improve investment climates and expand trade within Central Asia.