Agricultural production and the extraction of natural resources have always been the economic core basis of development for the Central Asian countries. In recent years, the major challenge faced by these countries has been transitioning to market-oriented economies from a centrally planned social economic system. Since their independence in 1991 these countries continue to undergo changes and reforms in their social-economic and legal systems.



Central Asia Economy Outline

Central Asia has emerged as one of the world’s fastest growing regions since the late 1990s and has shown notable development potential. This is significant for a region comprising largely of small landlocked economies with no access to the sea for trade. Among the advantages of the region are its high-priced commodities (oil, gas, cotton and gold), reasonable infrastructure and human capital as legacies of Soviet rule; and a strategic location between Asia and Europe. Furthermore, many Central Asian Republics have embarked on market-oriented economic reforms to boost economic performance and private sector competitiveness.

Recent Economic Revival

Following a prolonged period of slow and negative growth, the region (Azerbaijan, Kazakhstan, Kyrgyz Republic, Tajikistan, Turkmenistan, and Uzbekistan) seems to have turned the corner during the last few years and an economic recovery seems under way. Some features include:

  • Economic growth (9.9% per year in 2002-2004) has accelerated to historically unprecedented levels.
  • Growth has been driven by high commodity prices – particularly oil and natural gas – and buyout demand, increasing inward investment, improved macroeconomic management and infrastructure development.
  • There are signs that oil and gas sector-led growth has stimulated the development of services sector (construction and banking) as well as some manufacturing activities.
  • The industrial recovery is linked to the performance of manufactured exports which have grown at about 10% per year. Manufactured exports per head in the Central Asian Republics as a whole rose to US$ 57.1 in 2003.
  • An upturn in agriculture was visible in non-oil Central Asian Republics due to high prices for cotton and wheat, good weather and some agricultural reforms.
  • There are also indications that economic prosperity has been accompanied by job creation and some reduction in poverty to around 41% of total population in the Central Asian Republics.
  • The region’s GDP per head rose to US$ 889 in 2004, placing it within the category of the world’s low income economies.
  • There are signs of a divergence in living standards between oil exporters and non-oil exporters.