The cumulative effect of high food prices, globally and nationally, lower food availability and a rise in fuel prices is expected to drive consumer prices up into the first half of 2022. The poorest households, who already spend 65 percent of their income on food will the most affected, with the same food basket now costing significantly more. With Omicron virus cases rising, economic recovery for 2022 can be further slowed.
Economic recovery in the Kyrgyz Republic remains slow and well below pre-pandemic levels. In 2021, GDP increased by 3.6 percent compared to the previous year, totalling 723 billion Kyrgyz soms (USD 8.5 billion). This increase was predominantly driven by annual improvements in trade (+10.5 percent), and formal remittances (14.4 percent increase in Jan-Nov 2021, equating to USD 2 billion) while other core sectors experienced a shrinking from construction (-4.8 percent) and agriculture (-5 percent). Nonetheless, growth projections remain positive for 2022 from 5 percent (by ADB) and over 6 percent by the Ministry of Economy and Commerce.
What remains of concern is the continuous increase in inflation and prices. The Consumer Price Index (CPI), has increased by 12 percent for all goods and services and by 18 percent for staple foods. It is worth noting the Government’s purchase of key food commodities last year, in a bid to stabilise prices, potentially helped a prevent a deterioration of food prices (wheat, vegetable oil and sugar was purchased for a cumulative sum of KGS 1.8 billion or USD 21.2 million). The CPI for fuel and lubricants is estimated to be at +39 percent, leading to an increase of transportation costs, which in turn affects all other prices. The abnormally high temperature this summer and lack of irrigation water led to low yields across multiple critical crops: wheat (-42 percent) barley (-46 percent), oil crops (-25.4 percent), sugar beet (-18 percent) and melons (-14 percent).
The Government continues to monitor and stabilize food markets across the country through price controls on 11 essential food items and to regulate import and export volumes. The Antimonopoly Agency will continue the monitoring fuel and lubricant prices and issuing recommendations to prevent a further increase in prices.