Crossroads Asia | Economy | Central Asia

EBRD Dials Down Kyrgyz GDP Forecast Over Sanctions Worries

While still growing, Kyrgyzstan’s GDP may slow due to increasing weight of sanctions.

In its June 2026 updated Regional Economic Prospects report, the European Bank for Reconstruction and Development (EBRD) revised downward Kyrgyzstan’s forecast on the back of recent European sanctions against the republic.

According to the EBRD, real GDP has expanded rapidly in Kyrgyzstan this year, growing by 10.1 percent year-on-year in the first quarter. In the short term, growth is expected to slow slightly but remain robust at 8.7 percent in 2026 and 7.0 percent in 2027. 

Risks loom, though how seriously is open for debate.

“The dominant near-term risk is the EU’s 20th sanctions package, adopted in late April 2026, which restricts dual-use goods exports to the Kyrgyz Republic and tightens controls on the financial and logistics sectors, thus weighing on economic activity,” the EBRD noted, adding that additional risks include higher energy prices – on the back of the Strait of Hormuz crisis – and the potential for further economic slowdown in Russia. 

Kyrgyzstan’s past GDP statistics are a rollercoaster that rises and falls in dramatic fashion. While there are many factors that feed into GDP growth, Kyrgyzstan’s political instability is historically a telling indicator. Note in the graph below the dips in 2005, 2010, and 2020, which map onto Kyrgyzstan’s three revolutionary changes of government. Of course, most countries experienced a bad 2020, but Kyrgyzstan’s pandemic experience was arguably worsened by its political upheaval that year, notching the region’s sharpest contraction.

External factors are equally important, not the least for how they can feed into domestic instability, or the perception of such risks. Here the EBRD’s warning, however slight its actual revision – a 0.3 point downgrade for the 2026 forecast from its February 2026 figures – should raise alarm in Bishkek.

On the sidelines of the St. Petersburg International Economic Forum this week, Kyrgyzstan’s First Deputy Prime Minister Daniyar Amangeldiev remarked that in Kyrgyzstan’s view, “Western sanctions are illegal.”

“But they have their own justification. They have their own protective measures,” he added.

This fits President Sadyr Japarov’s stance, as aired during his 2025 United Nations remarks. 

In May, Kyrgyz Prime Minister Adylbek Kasymaliev said that negotiations were underway with an array of Western powers that have targeted Kyrgyz banks, in particular, with sanctions, including the United States, the United Kingdom, and the EU, but offered few details.

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