August results. Economic growth slows down in Kyrgyzstan

Economic growth remains high as a result of August, but it slowed down for the first time in three months. And all the final indicators, taking into account gold production and without it, differ almost twice.
Golden safety bag of GDP
Against the background of high gold mining rates, the economy is growing this year. But experts immediately warned that the effect of a low economic base would be exhausted in the fall. This means that by the end of the year, economic growth will be more modest than in summer.
The results of August showed that the economists were right. GDP growth slowed down by 0.7 percent at once.
According to the results of January - August 2019, the GDP of Kyrgyzstan amounted to 334,566.6 billion soms. Compared to 2018, it grew by 6.2 percent.
The indicators are clear: the economy stays afloat and shows good growth due to the "golden safety bag" this year. Since the end of 2018, the Kumtor enterprise has been developing gold-rich ore.
A similar situation was in 2017. And if we compare GDP growth two years ago and now, it is almost identical. In 2017, GDP has grown by 6 percent over eight months, and in 2019 - by 6.2 percent.
If we look at the economy without gold, the situation is much more modest. GDP growth without Kumtor is half as much.
According to the results of January - August 2019, GDP excluding enterprises for development of Kumtor mine amounted to 298,463.2 billion soms. This is 3 percent more than in 2018.
Economic growth without gold slowed down by only 0.1 percent in August.
Experts of the Eurasian Development Bank note that Kyrgyzstan's GDP is growing without Kumtor against the background of improvement in the construction sector.
Industrial pleasures
Due to the high gold mining rates this year, industrial production is also growing steadily. But without Kumtor, indicators are tending in the opposite direction.
In January - August 2019, Kyrgyzstan has manufactured industrial products for 169,570.7 billion soms. This is 17 percent more than in 2018. But a low base effect also has its influence. The closer is to the end of the year, the more modest the growth becomes.
In just a month, the growth in industrial production slowed down by 2 percent.
According to the National Statistical Committee, the growth in industrial production in January - August 2019 is caused by an increase in the production of base metals, textile production, extraction of metal ore, crude oil and natural gas, chemical production and coal production. At the same time, the production of oil products (by 46.1 percent) and pharmaceutical products (by 14.8 percent) decreased.
Without enterprises for development of Kumtor, the volume of industrial production amounted to 92,016.96 billion soms for eight months. Compared to 2018, the decline made up 2 percent.
Prices of potatoes, fruit and cigarettes are rising
Since the beginning of the year, consumer prices in Kyrgyzstan have grown by 0.3 percent.
Food and non-alcoholic beverages grew by 0.7 percent, tariffs for services - by 1.2 percent, alcoholic beverages and tobacco - by 3.4 percent. But non-food products, on the contrary, fell by 1.8 percent.
Since the beginning of 2019, a decrease in consumer prices and tariffs was observed in Osh (by 1.1 percent) and Talas region (by 0.1 percent).
The highest price increases were registered in Batken region, where food and non-alcoholic beverages rose in price the most (by 4.7 percent). Prices rose significantly in Issyk-Kul region (by 2 percent) due to a rise in price of alcoholic beverages and tobacco products (by 4.6 percent).
The maximum increase in prices and tariffs for services was registered in Naryn region (2.5 percent), for non-food products - in Issyk-Kul region (0.3 percent).
Salaries grow in mining and construction industries
According to the National Statistical Committee, an average salary in Kyrgyzstan has reached 16,448 soms.
An increase in an average monthly accrued salary compared to 2018 was observed at enterprises and organizations engaged in all types of economic activity, with the exception of enterprises and organizations in the field of information and communication, transportation and storage of cargoes, as well as other servicing activities.
According to the results of the second quarter of 2019, the cost of living in Kyrgyzstan amounted to 4,739.07 soms, for pensioners - 4,224.81 soms.
Analysts' forecast: what to expect by the end of the year
The team of analysts at the Eurasian Development Bank (EDB) believes that the economic slowdown will continue in the coming months.
"The dynamics of economic growth in Kyrgyzstan is still largely formed at the expense of production of gold at Kumtor mine. The composite leading indicator calculated by the Eurasian Economic Commission indicates that an increase in business activity should be expected in September 2019. However, at the beginning of the fourth quarter of 2019, the low base effect in the gold sector will be exhausted, which will lead to a slowdown in economic growth. As a result, by the end of 2019, we expect a growth of the republic's GDP by 4 percent," Aigul Berdigulova, Analyst at the EDB Economic Analysis Department, commented on the situation in the economy to 24.kg news agency.
She notes that the dynamics of industrial production without taking into account the gold factor has improved. Extraction of metal ores and textile production are growing.
According to the forecast, production in a number of industries will recover in the fourth quarter of 2019.
The exception is the oil refining sector. Decline in its indicators is associated with structural factors.
"The main investments are made in the water supply sector. The high investment activity of mining enterprises persists. At the same time, capital investments in the transport sector decreased. Until the end of 2019, the dynamics of investment demand will continue to form with an active participation of the public sector," Aigul Berdigulova said.