Central Asia and Mongolia to see highest economic growth in the EBRD regions

• Economies of Central Asia and Mongolia set to grow by 5.6 per cent in 2026, according to the EBRD’s latest macroeconomic forecasts
• Regional growth to moderate to 5.3 per cent in 2027
• Energy price volatility, supply-chain disruptions, economic sanctions and slower growth in Russia and China among the key growth risks

Central Asia and Mongolia will remain resilient to geopolitical shocks and record the highest growth rates of the EBRD countries of operation in 2026 and 2027, according to the latest Regional Economic Prospects report published by the European Bank for Reconstruction and Development (EBRD) today.

The economies of Kazakhstan, the Kyrgyz Republic, Mongolia, Tajikistan, Turkmenistan and Uzbekistan are projected to grow by 5.6 per cent in 2026 and 5.3 per cent in 2027. The EBRD has revised down its 2026 forecast for the Kyrgyz Republic to reflect the expected impact of new European Union (EU) sanctions.

Economic activity in Central Asia and Mongolia has remained resilient in early 2026, but is showing signs of gradual moderation. Strong domestic consumption and investment continue to support growth, with the services sector emerging as a key driver alongside construction and manufacturing. Downside risks have intensified recently, however, driven by energy price volatility, supply-chain disruptions, economic sanctions and slower growth in the region’s largest trading and economic partners, Russia and China. Overall, growth prospects remain robust, but are increasingly dependent on the pace of domestic reforms and efforts to strengthen resilience to external shocks.

In Kazakhstan, the construction, transportation and manufacturing sectors maintained their momentum in Q1 2026, though the extractive industry contracted by 11.4 per cent year on year following disruptions to the Caspian Pipeline Consortium (CPC) pipeline and an incident at the Tengiz oil field. Fixed capital investment expanded 6.4 per cent year on year in the first three months of 2026, with notable gains in manufacturing and energy supply. Household consumption softened and real wages declined. Gross domestic product (GDP) growth is projected to moderate to 4.7 per cent in 2026 and 4.5 per cent in 2027. Key risks include oil price volatility, further potential disruptions to the CPC pipeline and other oil export routes, and economic slowdowns in China and Russia.

In the Kyrgyz Republic, real GDP continued to expand strongly in the first quarter of 2026, driven by industry, construction and trade. Fixed capital investment rose by 25.5 per cent year on year thanks to strong investment in infrastructure, energy and housing. Economic growth is expected to remain strong in the short term, but moderate to 8.7 per cent in 2026 and 7.0 per cent in 2027. The dominant short-term risk is the EU’s late-April 20th sanctions package, which restricts exports of dual-use goods to the Kyrgyz Republic and tightens controls on the financial and logistics sectors. Higher energy prices and Russia’s economic slowdown create additional downside risks.

Mongolia’s economic growth has been supported by a recovery in agriculture and robust mining activity. Industrial output expanded by 61.2 per cent year on year in the first quarter of 2026, driven by a large rebound in the extraction of coal and copper. Private consumption remained resilient, partly supported by consumer lending growth of 16.5 per cent year on year. Real GDP growth is projected to ease to 5.5 per cent in both 2026 and 2027. The main downside risks include a slowdown in China’s economic activity, driven by higher energy prices linked to the conflict in the Middle East, as well as rising fuel prices.

Tajikistan’s economy grew by an estimated 8 per cent year on year in the first quarter of the year, driven by growth in trade, transport and communications, as well as strong manufacturing activity and higher electricity generation. Rising employment and nominal wages translated into real income gains, while fixed capital investment expanded by 34.2 per cent year on year, reflecting in part strong public spending commitments, including on the Rogun hydropower project. In March 2026, Moody’s upgraded Tajikistan’s sovereign credit rating to B2 with a stable outlook, citing the country’s continued economic resilience and improved fiscal management. GDP growth is forecast to ease to 7.9 per cent in 2026 and 7 per cent in 2027. The key vulnerability remains Tajikistan’s dependence on Russia, where a slowdown would depress the remittance inflows that underpin household incomes. Rising inflationary pressures linked to the conflict in the Middle East present a further downside risk.

Turkmenistan’s economy grew 6.3 per cent on the year in the first quarter, according to official sources. The oil and gas sector exceeded planned extraction and processing volumes, while overall industrial output grew more modestly, at 2.4 per cent year on year. Construction was supported by strong public investment and the continued implementation of large infrastructure projects.

The authorities have launched the fourth phase of the Galkynysh gas field expansion, which is expected to provide additional support to economic activity in the medium term. At the same time, Turkmenistan’s gas exports remain highly concentrated on the Chinese market, leaving the economy vulnerable to fluctuations in Chinese demand. GDP is forecast to grow 6.3 per cent in both 2026 and 2027, with potential upside from higher investment activity and the gas field expansion.

Uzbekistan’s economic momentum strengthened in early 2026, with real GDP expanding 8.7 per cent year on year in the first quarter. This broad-based growth was consumer led. Rising remittances and strong wage growth fuelled service sector expansion. Industry and construction added further momentum, advancing by 8 per cent and 15.5 per cent year on year, respectively. The economy is forecast to grow by 6.5 per cent in 2026 and 6.0 per cent in 2027. Upside potential could stem from faster‑than‑expected progress on privatisation, while the downside risks are mainly associated with an economic slowdown in Russia and inflationary spillover effects from the conflict in the Middle East.