Tuesday, August 27, 2019

Kyrgyzstan maintains rate as inflation slowly rises

     Kyrgyzstan's central bank left its discount rate steady at 4.25 percent, confirming its forecast for inflation to be around 4.0 percent by December this year and then rise further in the medium term to within its target range of 5.0 to 7.0 percent against the backdrop of stable international inflation.
      The National Bank of the Kyrgyz Republic (NBKR), which has cut its rate twice this year, most recently in May, added inflation as of Aug. 16 was 1.9 percent, up from 1.5 percent in July, with inflationary dynamics set to remain low until the end of this year in the absence of shocks.
     Economic output is rising in all the major sectors in the economy, especially in industry, while there has been a trend of reduced inflow of remittances, which could weaken domestic demand.
     Kyrgyzstan's gross domestic product grew an annual 5.3 year percent in the first quarter of this year and NBKR said GDP in the January to July period was up 6.9 percent, but excluding the Kumtor gold mine, GDP grew 3.1 percent.
     In June the International Monetary Fund forecast Kyrgyzstan's economy would expand 3.8 percent this year from 3.5 percent in 2018 due gold production and fiscal expansion, and reach about 4 percent in the medium term. However, the IMF also said risks were tilted to the downside due to trade tensions and the regional economic environment.
     The IMF also forecast inflation would average 2.2 percent this year, up from 1.5 percent last year, and rise further to 4.9 percent in 2020.



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