|The economy of Kyrgyzstan was severely affected by the collapse of the
Soviet trading block. In 1990, some 98% of Kyrgyz exports went to other
parts of the Soviet Union. Thus, the nation's economic performance in the
early 1990s was worse than any other former Soviet republic except
war-torn Armenia, Azerbaijan, and Tajikistan. While economic performance
has improved in the last few years, difficulties remain in securing
adequate fiscal revenues and providing an adequate social safety net.
The principal sector of the economy in Kyrgyzstan is agriculture, which contributes about one-third of the GDP and more than one-third of employment. The republic possesses a mountainous terrain, which accommodates livestock rearing, the largest sector within agriculture. The main crops are cotton, hemp, tobacco, vegetables, and fruit. By the early 1990s, the private sector provided between one-third and one-half of some harvests. Wool, leather, and silk also are major products, and much of the industrial sector is devoted to agroprocessing, the most attractive proposition for foreign investors.
The position of the country geographically works to its disadvantage. The region is prone to harsh climatic conditions and is in an earthquake zone. In 1992 there were earthquakes and mudslides, and in 1998 two mudslides also occurred in southern Kyrgyzstan
With respect to Kyrgyzstan's potential for mining and energy extraction, the Republic is rich in mineral resources but has negligible petroleum and natural gas reserves. Among its reserves are substantial deposits of coal, gold, uranium, antimony, and other rare metals. The main barrier to development has been the inaccessibility of many of the potential resources. The government has actively cultivated foreign cooperation in processing and extracting gold while building up the nation's own reserves in the process. OPIC has recently been involved in the establishment of two joint ventures in Kyrgyzstan with Western gold companies.
Kyrgyzstan's plentiful water resources and mountainous terrain have enabled it to export hydroelectric energy. However, Kyrgyzstan imports petroleum and gas. There are plans to construct a petroleum refinery in Kyrgyzstan. The metallurgy industry is among the most important in Kyrgyzstan, and the government is hopeful of attracting foreign investment in the field.
Kyrgyzstan's principle exports, which go overwhelmingly to other Commonwealth of Independent States (CIS) countries, are nonferrous metals and minerals, woolen goods and other agricultural products, electric energy, and certain engineering goods. In turn, the Republic relies on other former Soviet states for petroleum and natural gas, ferrous metals, chemicals, most machinery, wood and paper products, some foods, and most construction materials.
The Kyrgyzstan Government has reduced expenditures, ended most price subsidies, and introduced a value added tax. Overall, the government appears committed to transferring to a free market economic system by stabilizing the economy and implementing reforms, which will encourage long-term growth. These reforms have led to Kyrgyzstan's accession to the WTO on December 20, 1998.
GDP: purchasing power parity -
$12.6 billion (2000 est.)
SOURCES: The World Factbook, U.S. Department of State
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