Economy of Kyrgyzstan

Agriculture remains a vital part of Kyrgyzstan's economy, providing a refuge for workers displaced from industry. Subsistence farming has increased, with agricultural production approaching 1991 levels after sharp reductions. Grain production in the lower valleys and livestock grazing on upland pastures occupy the largest share of the agricultural workforce. Farmers are shifting to grain and away from cotton and tobacco. Other important products are dairy products, hay, animal feed, potatoes, vegetables, and sugar beets. Agricultural output comes from private household plots (55 percent of the total), private farms (40 percent), and state farms (5 percent). Further expansion of the sector depends on banking reform to increase investment, and on market reform to streamline the distribution of inputs. Land reform, a controversial issue in Kyrgyzstan, has proceeded very slowly since initial legislation. Agriculture contributes about one-third of the GDP and more than one-third of employment.

In the post-Soviet era, mining has become increasingly vital to Kyrgyzstan's economy. The Kumtor Gold Mine, is among the world's largest gold deposits. Plans are in place for new gold mines at Jerooy and Taldy-Bulak, while a significant gold discovery was announced at Tokhtonysay in late 2006. Kyrgyzaltyn, a state agency, oversees all mines, many operated as joint ventures with foreign companies. While uranium and antimony were once crucial outputs during the Soviet era, their production has dwindled. the government aims to exploit Kyrgyzstan's substantial remaining coal deposits, estimated at 2.5 billion tons. This endeavor aims to lessen reliance on foreign energy sources, with a particular focus on the Kara-Keche deposit in northern Kyrgyzstan, capable of an annual output between 500,000 and 1 million tons.

In the post-Soviet era, Kyrgyzstan's industries faced challenges due to disruptions in the supply of raw materials and fuels, coupled with the disappearance of Soviet markets. While the sector has not fully recovered from these setbacks, there have been notable developments. Excluding gold production, industry contributed only 14 percent of the gross domestic product (GDP). Investment and restructuring efforts have remained limited, with the electricity industry, traditionally a significant contributor to GDP, experiencing stagnation in recent years. Government support has shifted focus from machine industries, prevalent in the Soviet era, to clothing and textiles. Food processing, which historically accounted for 10 to 15 percent of industrial production, witnessed a decline. However, in recent years, the glass industry has surpassed clothing and textiles in both investment received and its contribution to GDP. The construction industry has seen steady growth, driven by major infrastructure projects such as highways and new gold mines. However, housing construction has been sluggish due to low investment.

Kyrgyzstan boasts a substantial potential for hydroelectric power generation, with over ninety percent of its electricity coming from hydro sources. However, despite this abundance, less than ten percent of its hydro potential has been tapped. The country has limited fossil fuel deposits, primarily relying on natural gas imports from Uzbekistan through imperfect barter agreements. Despite high per capita energy consumption relative to average income levels, the government lacks a comprehensive plan to curtail demand. Additionally, up to 45 percent of electricity generated, particularly in winter, is lost due to illegal diversions or leaks from the distribution system. Hydroelectric plants account for the majority of domestically consumed electricity, with three commercial thermoelectric plants also in operation. Leveraging its hydroelectric abundance, Kyrgyzstan exports electricity to Kazakhstan and Uzbekistan in exchange for fossil fuels. The completion of the Kambar-Ata hydroelectric plant on the Naryn River in 2010 marked a significant milestone, enhancing Kyrgyzstan's export potential and domestic energy supply. However, challenges persist due to antiquated infrastructure and poor management, particularly evident during low water levels in winter. Kyrgyzstan has been proposed as a member of the Shanghai Cooperation Organisation's Asian Energy Club, aiming to unify oil, gas, and electricity producers, consumers, and transit countries in the Central Asian region to establish energy self-sufficiency. Other proposed members include China, Kazakhstan, Tajikistan, and Uzbekistan.