NUR-SULTAN – The World Bank projected the recovery of economic growth in Central Asia at 3.7 percent in 2021 and 4.3 percent in 2022, reported the press service of the organization on June 8.
The original prediction for Central Asian economic growth by the World Bank in 2020 was 3.1 percent.
The strongest economic growth is predicted for Uzbekistan with a 4.8-percent increase and Tajikistan with a 5.3-percent increase. Kazakhstan and Kyrgyzstan are expected to experience growth by 3.2 percent and 3.8 percent respectively.
The revival of the Central Asian economies is supported by a modest rise in commodity prices, relaxation of production cuts among major oil producers, and increased foreign direct investment.
In 2020, the gross inflow of foreign direct investment to Central Asian countries reportedly amounted to $20.7 billion, which constituted a significant downward trend compared to the pre-coronavirus period in 2019 when foreign direct investment amounted to $32.2 billion.
According to the World Bank’s Doing Business Index, Kazakhstan continues to have a lead as one of the most business-friendly economies in Central Asia.
Out of all countries in the region, Uzbekistan has shown the most dramatic reforms for the attraction of foreign direct investment, including the strengthening of protection for minority investors, clarification of ownership structures, simplification of tax payments and bolstering of corporate transparency.
The countries of Central Asia tend to attract foreign investment due to such factors as the richness of natural resources, the novelty of the markets, macroeconomic stability, large domestic markets, cheaper labor, the high growth potential of economic sectors and the general improvement of the business environment in the past years.
An upward trend in Central Asian economic recovery and intraregional competition positively affects the investment climate and the region’s reputation on the global market.
Nonetheless, the World Bank emphasized that the economies of Central Asia remain vulnerable to the fallout from the pandemic that could affect businesses and restrain employment.