How does Central Asia’s economy reflect successive economic crises?

Historically, the Silk Road passed through the vast plains of Central Asia, thanks to commercial convoys, the Far East was connected in the growing consumer markets of the European continent, and cities such as Samarkand and Bukhara became popular cultural and commercial centres.

Today, many questions arise about Central Asian countries’ ability to withstand changes in the global economy. In the past three years, the international economy has experienced a range of major shocks, including the coronavirus pandemic, the Russian-Ukrainian war, geopolitical tensions between the United States and Europe on the one hand and China on the other, and the emergence of regional and international blocs that have fostered a climate of global polarism.

That liquidity in the international political and economic landscape has created instability that has weighed on many major economies as well as emerging and developing economies, including those of Central Asian countries.

To date, Central Asian countries have demonstrated good economic capacity in the face of hurricanes in the global economy, assisted by their broad growth potential. Their five countries’ gross domestic product (GDP) (Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan and Uzbekistan) amounted to $347 billion. Over the past two decades, gross domestic product (GDP) had grown more than seven-fold, the population of 77 million had increased 1.4 times since 2000.

International estimates indicate that the average annual economic growth rate of Central Asian countries has been 6.2 per cent over the past 20 years, compared with the developing countries’ growth rate of 5.3 per cent and the average global economic growth of 2.6 per cent per annum.

Export earnings, migrant workers’ remittances and FDI contributed to higher income and poverty reduction in most of the five societies.

In fact, Central Asian countries have taken concrete steps to resolve part of their structural challenges international transit route for the Caspian Sea, It is a faster and more efficient alternative than traditional maritime routes, while there is a regional economic cooperation programme involving 11 States, including Central Asia, to promote regional cohesion with a focus on priority sectors such as transport, energy, trade facilitation and trade policy coordination. New major railway lines are also being built to connect Central Asia to Chinese ports.

Investment in transport infrastructure is undoubtedly a necessary factor for greater regional integration through the establishment of highways, railways and logistics centres, which is precisely why Kazakhstan is seeking to become a major logistics hub and transit hub that could provide Central Asian countries with access to world markets.

Nevertheless, some experts believe that the development of the region’s transport sector cannot yield a real return without improving the business environment. From their perspective lies the real challenge facing the countries of the region and questions their future economic attractiveness.

International reports indicated that 16 per cent of international investors had cancelled their investment plans in the region completely or expected a decline in investment due to obstacles resulting from the Russian-Ukrainian conflict and 8 per cent of investors expressed their conviction that the region’s economic attractiveness would decline in the next three years, Regulatory and legal frameworks are characterized by a lot of liquidity and indiscipline, customs procedures and the protection of intellectual property rights, which are flawed. The promotion of intraregional trade remains in doubt, despite measures taken in recent years, especially during the coronavirus pandemic, to promote digital communication to facilitate e-commerce. The countries of the region still have a long way to go to truly integrate themselves into the global system.

The projected growth in the consumer goods and foodstuffs sector may be due in part to the region’s marked population increase, with nearly 2 million people born in Central Asia annually, the region’s population being among the youngest in the world, and the youth group accounting for about 60 per cent of the population, well above the global average.