Kyrgyzstan: Economy

Despite the backing of major Western donors, including the International Monetary Fund (IMF), the Kyrgyz Republic has had economic difficulties following independence. Initially, these were a result of the breakup of the Soviet trading bloc and resulting loss of markets, which impeded the republic's transition to a free market economy. Through economic stabilization and reform, the government seeks to establish a pattern of long-term consistent growth. Reforms led to the Kyrgyz Republic's accession to the World Trade Organization (WTO) on December 20, 1998.

The Kyrgyz Republic's economy was severely affected by the collapse of the Soviet Union and the resulting loss of its vast market. In 1990, some 98% of Kyrgyz exports went to other parts of the Soviet Union. Thus, the nation's economic performance in the early 1990s was worse than any other former Soviet republic except war-torn Armenia, Azerbaijan, and Tajikistan. While economic performance has improved in the last few years, difficulties remain in securing adequate fiscal revenues and providing a sufficient social safety net.

Agriculture is an important sector of the economy in the Kyrgyz Republic. By the early 1990s, the private agricultural sector provided between one-third and one-half of some harvests. In 2010 agriculture accounted for 55% of GDP and about 32% employment. The Kyrgyz Republic's terrain is mountainous, which accommodates livestock raising, the largest agricultural activity. Main crops include wheat, sugar beets, cotton, tobacco, vegetables, and fruit. Wool, meat, and dairy products also are major commodities. Agricultural processing is a key component of the industrial economy, as well as one of the most attractive sectors for foreign investment.

The Kyrgyz Republic is rich in mineral resources but has negligible petroleum and natural gas reserves; it imports petroleum and gas. Among its mineral reserves are substantial deposits of coal, gold, uranium, antimony, and other rare-earth metals. The government hopes to attract foreign investment in mining and metallurgy, but local business conditions are very challenging to most companies. The Kyrgyz Republic's plentiful water resources and mountainous terrain enable it to produce and export large quantities of hydroelectric energy.

The Kyrgyz Republic's principal exports are nonferrous metals (primarily gold) and minerals, woolen goods and other agricultural products, electric energy, and certain engineering goods. Its imports include petroleum and natural gas, ferrous metals, chemicals, most machinery, wood and paper products, some foods, and some construction materials. Its leading trade partners include Switzerland, Russia, China, and neighboring Kazakhstan and Uzbekistan.

The Kyrgyz Republic exports antimony, mercury, rare-earth metals, and chemical products to the United States. It imports grain, medicine and medical equipment, vegetable oil, paper products, rice, machinery, agricultural equipment, and meat from the United States. In 2010 Kyrgyz exports to the U.S. totaled $90.3 million; 2010 Kyrgyz imports from the U.S. totaled $188.2 million, much of which consisted of vehicles, poultry meat and equipment.

Sources:

CIA World Factbook (March 2012)
U.S. Dept. of State Country Background Notes ( March 2012)

Glossary