The World Bank has released its Country Economic Memorandum (CEM) for the Kyrgyz Republic, a detailed analytical report aimed at identifying key constraints to economic growth and suggesting reform directions. The CEM is designed to facilitate policy dialogue with the government and engage various stakeholders by providing actionable recommendations to enhance market competition, improve the business environment, expand trade opportunities, attract foreign investments, and increase human capital's contribution to growth.
The report highlights several challenges faced by the Kyrgyz Republic in improving living standards and creating better job opportunities for its rapidly growing population. A significant issue is the country's dependence on investment in extractive sectors, which contributes little to labor and skill development. This reliance hampers sustainable economic growth. Additionally, inefficiencies within the economy have stunted private sector growth and reduced productivity. Institutional weaknesses in the business environment further dampen competition and hinder new firm entry and expansion of efficient firms.
Despite an average annual economic growth rate of 4.7% from 2000 to 2024, well-paying job creation remains limited, with approximately 70% of employment being informal and low-paying.
To address these issues, the CEM suggests enhancing business dynamism by simplifying the business environment. Recommendations include streamlining regulatory reforms, strengthening competition law, maximizing benefits from foreign direct investment (FDI), and utilizing trade as a growth engine.
The report emphasizes that targeted measures are needed to enhance human capital skills necessary for adopting advanced technologies and business models. Comprehensive reforms are recommended over addressing isolated constraints for effective improvement in business dynamism.