The Economy of Central Asia: A Fresh Perspective

Abstract

The economic role and prospects of Central Asia are still not fully appreciated by the world. Over the last 20 years, the countries of the region have made significant progress in their development, and have far-reaching growth prospects. The region’s GDP has been increasing at an average rate of 6.2% per year in real terms, reaching $347 billion. The population of Central Asia is almost 77 million, and it keeps growing at the rate of 2% per year. Inward FDI stock is estimated at $211 billion, with foreign trade turnover having increased sixfold since 2000. However, because of inertia, the international community still fails to perceive the region as a major player on the economic map of the world. The purpose of this report is to offer a fresh perspective on Central Asia as a large and dynamic region. The report provides an analysis of economic development outcomes for the countries of the region, an assessment of their successes and challenges, and defines points of further economic growth. The strategic role of Central Asia in the vast Eurasian space will be increasing: the region will become more important for its immediate neighbours, and for its key economic partners — Russia and China. The countries of the region received an historic chance to take advantage of their transit position, and of the opportunity to expand into external markets through emerging international transport corridors. A significant potential is offered by coordinated development of the water and energy complex, including “green” power engineering. To unlock the region’s potential, it is important to overcome certain other challenges, such as the lack of access to the sea, resource dependence, low level of financial development, and impact of climate change.

Keywords: Central Asia, Kazakhstan, Kyrgyzstan, Uzbekistan, Tajikistan, Turkmenistan, Eurasian Economic Union, mutual trade, mutual investments, regional cooperation, economic development

JEL Classification: E60, F13, F15, F21, F43, F50, F64, O13, Q57