Page 61 - bne IntelliNews monthly magazine October 2024

bne October 2024 Eurasia I 61
Kyrgyzstan renaissance
Previously dependant on agriculture and gold mining, the Kyrgyz Republic has taken its war windfall and poured it into multiple hydropower projects, led by the flagship Kambarata-1 hydropower power plant (HPP) that will increase the country’s installed power capacity by half, provide the energy to boost the economic boom the small Central Asian country is already enjoying, and earn money for Kyrgyzstan through power exports to the rest of the energy-hungry region.
Economic growth is now running at 7-8% a year and the government’s tax revenue
doubled in 2023 on a combination
of reforms and mushrooming trade, Kyrgyzstan's Chairman of the Cabinet of Ministers Akylbek Japarov told bne IntelliNews in June.
“Average GDP amounted to 7% and accelerated to 8.8% in the first quarter of 2024,” he noted, reeling off an impressive array of macroeconomic results, including a doubling of tax revenues in the last year.
However, the nominal GDP of the country is still only $14bn, making Kyrgyzstan one of the poorest countries
in Central Asia, with the region having
a collective GDP of around $450bn. Nevertheless, all the macroeconomic indicators are rapidly improving, particularly inflation, which has fallen from double digits, caused by the effects of the recent polycrisis, to 4% this year.
However, the boom may have reached a peak. As reported by bne IntelliNews, the Russian economy probably reached peak at the end of the first half of this year and is now starting to cool as the military Keynesian factors that boosted economic growth are now exhausted.
Uzbekistan's textile sector booming, ready for the next phase
Ben Aris In Samarkand
Uzbekistan’s textile sector is booming. Cotton has long been Uzbekistan’s “white gold.” Its importance to the country is so great that the cotton plant features in its national emblem; exports of its high-grade cotton sustained the country during the worst of the economy crisis that followed the collapse of the Soviet Union in 1991.
But in 2017 newly elected President Shavkat Mirziyoyev took the radical
step of banning exports of raw cotton entirely. Industry was forced to go up
the value chain overnight and massively expand the production of textiles. Private cotton farms were then set up starting in 2018 in what in effect was a large-scale privatisation of the entire cotton sector.
It was bold gamble and, as bne IntelliNews reported, it has paid off handsomely. Production is up five-fold since the textile modernisation campaign was launched at the start of the Mirziyoyev era and exports are up four-fold, of which only 10% comprise raw cotton and the rest are finished goods.
At the same time, the sector was privatised, broken up into just under
150 “clusters” where private investors were given long-term leases on land to grow raw cotton and were expected to set up complete vertically integrated production chains called clusters that run from growing cotton through to producing finished apparel and other products.
Today Uzbekistan exports to more than 80 counties, earning $3.4bn in 2023 from textiles based on the production of 1.3mn tonnes per year (typ) of raw cotton. More than $3.2bn has been invested in the sector, almost entirely by private companies, and the investment is ongoing as the sector continues to expand.
Uzbekistan's textiles sector is growing by leaps and bounds, but now it is well established its privately owned companies are looking to increase production again and cast their nets wider. / Ben Aris
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