A Refresher of the Kyrgyz Republic & Forward-looking Outlook

The Kyrgyz Republic has strong fundamentals and presents attractive opportunities for foreign investors looking to increase exposure to the region.

Growth remains exceptionally strong

Growth was strong at an estimated 11.1%, moderating from 11.5% in 2024, supported by continued public investment and economic diversification efforts.
We are continuing to see industry expansion accelerate from 9.3% in 2024 to 10.7%, as new industrial facilities were commissioned under the government “100 Industrial Enterprises-2025” initiative. Food processing, construction materials, and chemical manufacturing posted solid gains, while pharmaceutical production nearly doubled.
Construction rose by 21.1%, down from 28.7% in 2024 but remaining elevated on sustained investment, mainly from domestic sources. Services, representing half of GDP, grew by 10.9%, up from 9.8%, with a 20.9% rise in wholesale and retail trade.

Domestic demand driving expansion

The Republic is experiencing rising household incomes and strong investment growth, underpinning domestic expansion, with private consumption increasing by 17.5% in the first 9 months of 2025.
Net money transfers, including remittances from abroad, rose by 22.6% (primarily from Russia), remaining a critical income stabiliser. Real wages increased by 9.9%, and consumer credit surged by 67.2%. Gross capital formation grew by 19%, reversing an 8% contraction a year earlier.
The deficit in net exports widened by 14%, as exports fell more than imports.

Financial sector strength

Loan portfolio growth in H1 2025 hit an all-time high of 48%, alongside declining levels of loan portfolio dollarisation, consistent with increased confidence in, and domestic use of, the Kyrgyz Som.
We are also observing a fall in NPLs, with the NPL ratio decreasing from 12.1% in H1 2024 to 10.7% in H1 2025, reflecting a stronger macro base, fuelled by a strengthening labour market, wage growth, and improved credit risk conditions.

Fiscal credibility improving

Buoyant revenue performance yielded a fiscal surplus of 2.5% of GDP. Improved tax administration and cyclical gains helped boost total revenue by 44.1%, with tax revenue increasing by 32.3% to 23.4% of GDP.
Total public debt rose to 39.5% of GDP from 36.2%, partly reflecting the country’s $700 million Eurobond issuance in 2025 and increased domestic debt.

The outlook remains sound

Growth is projected to slow but remain robust at 8.9% in 2026 and 8.4% in 2027.
Domestic demand is expected to continue underpinning growth, supported by continued remittance inflows, real wage gains, and consumer credit expansion, though at a more moderate pace.
Inflation is projected to accelerate to 10.3% in 2026 before moderating to 8.5% in 2027.

Some risks to consider

A sharper-than-expected regional slowdown could weigh on trade, investment, and remittances.
More domestically, the election cycle may introduce policy uncertainty, potentially delaying reforms or shifting spending priorities.
On the banking side, rapid consumer loan expansion poses risks to both inflation and financial stability.
The economy also remains vulnerable to power shortages stemming from inadequate and ageing energy infrastructure.

The Cordoba View

With strong fundamentals, Kyrgyz poses strong opportunities for foreign investors looking to increase exposure to the region, particularly as banks continue to maintain substantial excess liquidity, with the banking sector’s liquidity ratio at 86.2% at end-2025.
It is evident that there are plentiful idle resources continuing to grow rather than flow into productive enterprises, which remains a challenge due to high lending rates driven in part by currency risk premiums.
Without finance, we cannot encourage productive private investment, and without that, there will always be a cap on job creation.

For the full note, see the Research Library.